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Kansas city 
public library 
Kansas city, 



From the collection of the 

^ m 

Pre linger 


V JJibrary 

San Francisco. California 

3 H L L M AG A Z I N E 

SPRING 1966 

A patient at the Institute of Physical Medicine and Rehabilitation at Neiv York Univer- 
siti/ Medical Center uses a special elastic cxiff with a dialing pencil to make speaker- 
phone calls. Looking on are Gale Smith, A.T.&T. Company engineer, and Mrs. Joy Cord- 
ery, senior occupational therapist in research at the Institute. As part of a joint research 
project of A.T.&T. and the Institute, Mrs. Cordery devotes six ho2irs a day to working 
with and observing disabled persons as they try to make and receive telephone calls ivith 
standard or slightly modified telephone equipment. The long-range objective of the proj- 
ect is to improve communications for the disabled. Dr. Howard A. Rusk, director of the 
Institute, feels the project will have world-wide importance for rehabilitation programs. 




Beorge B. Turrel 

Donald R. Woodford 
Managing Editor 
Alix L. L. Ritchie 
Associate Editor 
Salvatore J. Taibbi 
Art Editor 


■ick R. Kappel 
in of the Boarc 

H. I. Romnes 


Charles E. Wample 


John J. Scanlon 


Published for the 
II System by the Public 
Relations Department, 
merican Telephone and 
Telegraph Company, 

195 Broadway, 

>lew York, N.Y. 10007 

Area Code 212 



SPRING 1966 


10 A Decade of New Products 

William S. Brown, Jr. 





Looking Ahead 

Annoyance Calls 
Hubert L. Kertz 

30 The Bell System and CATV 

Gordon N. Thayer 

Communications for Education 


John A. Hornbeck 

In This Issue 

In The News 

MAY 2 5)966 

This magazine is published to present significant 
developments in communications and to interpret Bell 
System objectives, policies and programs for the 
management of the Bell System and for leaders of 
business, education and government. 


Students at the Carnegie Institute of Tech- 
nology use teletypewriters in a classroom 
as they learn the sophisticated techniques 
of time-sharing for programing and retrieval 
of computer-stored information. The use of 
computers and communications, which is 
creating vast changes in the field of educa- 
tion, is the subject of the article "Com- 
munications for Education," in this issue. 

Historical perspective on America's way 

of assuring the public adequate communications 

service at reasonable rates 


(A BTM staff report) 

■ Away back in 1820 Congress conferred upon the city of 
Washington the power "to regulate the rates of wharfage 
and the sweeping of chimneys." 

Wliile this power of regulation bears little resemblance to the 
type of regulatory powers wielded by Federal and State Com- 
missions over the communications industry today, the briel 
flashback into history does indicate that Federal regulation oi 
private enterprise is nothing new. 

Regulation is America's way of assuring that the public gets 
adequate service at reasonable rates. Government agencies like 
the Federal Communications Commission, which currently is 

conducting a full-scale investigation of the Bell System's 
charges for interstate services, were created not to operate the 
telephone companies, but to regulate them in the public 

In 1877 the Supreme Court defined the "public interest" 
concept for regulating business. The Court approved an Illinois 
law that fixed maximum storage rates for grain elevators on 
the grounds that a state could regulate "a business that is 
public in nature though privately owned and managed." 

I^egulation by Legislatures 

Regulation began because of a desire to set up some form 
of legal control over the operation of so-called natural monop- 
jOlies engaged in very essential forms of public service. It 
jstarted out as regulation of essential public services by legisla- 
tures under statutes primarily concerned with adequacy of 
service and avoidance of preference or discrimination. 

Obviously, with changing conditions, this early type of direct 
regulation by legislatures inevitably broke down. It was inflex- 
ible; it became unworkable. Laws had to be amended as 
?conomic conditions changed and modern technology devel- 
oped. Continuous regulation was impossible because legisla- 
tures held sessions at only certain times during the year. State 
egislators also lacked specialized knowledge of regulatory 
aroblems. The increasing burden of other legislative duties and 
■.he growth in the number of utilities made it increasingly 
;umbersome for legislative bodies to effectively exercise regu- 
atory responsibilities. 

Demand grew for more effective methods of regulation, ones 
apable of adapting to an increasingly complex society and of 
afeguarding the interests of both consumers and the utiUty 
ompanies. The states turned to regulatory commissions. 

The first commission was set up in 1891 by the State of 
Jorth Carolina. By 1920, more than two-thirds of the states 
lad regulatory commissions. Today, every state in the Union 


— as well as the District of Columbia — has a state public utilitj 
commission, public service commission, commerce commissior 
or railroad commission, which regulates intrastate aspects o: 
utilities' operations. However, communications services in al 
the cities and towns in Texas are regulated by municipa 

In addition, there are a number of Federal commissions with: 
jurisdiction over industries involved in interstate commerce 
These include the Civil Aeronautics Board, Interstate Com- 
merce Commission, Federal Power Commission, Federal Com 
munications Commission, and many more. 

New Concepts Developed 

The state regulatory commissions, during nearly a hall 
century, proceeded to give regulation depth. They developec 
new tools, new concepts which have furnished real muscle anc 
effectiveness to regulation. 

Federal public utility regulation started with the creation ol 
the Interstate Commerce Commission in 1887. Congress ere 
ated tliis first Federal regulatory agency to regulate the rail- 
roads. The ICC's authority was expanded to include the 
prescription of a uniform system of accounts for telephone 
and telegraph companies in 1910 and then the regulation ol 
interstate depreciation rates and charges to customers in 1920. 

In 1927, with the sharp increase in various types of radio 
stations, the Federal Radio Commission was formed with pow- 
ers over the allocation of radio frequencies and licensing of 
stations. Both the ICC and FRC were forerunners of the FCC. 

Six years later, an interdepartmental committee was set up 
by President Franklin D. Roosevelt to study communications 
regulation. The interdepartmental committee reported that 
overlapping regulation existed and said: 

"Communications services should be regulated by a single|j 
agency." n 

President Roosevelt sent a special message to Congress on 
February 26, 1934, urging the creation of such an agency. Four 
months later the President signed the act creating the Federal 
Communications Commission. 

The FCC 

The FCC regulates interstate and foreign communications, 
common carriers' earnings, system of accounts, depreciation, 
consti-uction, radio licenses, tariff rates and regulations, sepa- 
ration of investment, expenses and revenue between interstate 

and intrastate operations, discontinuance of service, and many 
other aspects of operations. 

Under the Communications Act of 1934 carriers are required 
to furnish service to customers upon reasonable request. All 
rates, practices, classifications and regulations must be "just 
and reasonable." The Commission also regulates radio and 
television broadcasting and safety and certain other special 
radio sei-vices, but this regulation does not include rates and 
earnings. It consists primarily of issuing licenses to operate 
and allocating frequency assignments. 

The FCC is composed of seven commissioners, not more 
than four from the same political party, all of whom are ap- 
pointed by the President of the United States and confirmed 
by the Senate. The commissioners' tenn of office is seven years, 
with one term expiring each year. The Commission chairman 
is apjx)inted by the President from among the commissioners. 
Each commissioner has a personal staff usually consisting of 
a legal assistant, engineering assistant and clerical assistants. 
The staff of the FCC is composed of about 1,500 people. It 
includes subdivisions appropriate to the various functions the 
Commission performs, such as Common Carrier Bureau, 
(Broadcast Bureau, etc. 

Continuing Surveillance 

Shortly after its creation, the FCC initiated the most exten- 
ive regulatory investigation ever undertaken up to that time. 
This four-and-a-half-year investigation of the telephone indus- 
ry was completed in 1939. 

This first FCC investigation covered practically every aspect 
if common carriers' business operations. As a result of the 
nvestigation, the Commission reached major conclusions that 
lave since guided its approach to telephone regulation. 

The report of one task force which conducted the investiga- 
ion led to the Commission's adoption of a policy of regulation 
/hich has come to be known as "continuing surveillance." 
Jnder this policy, which has been used for almost 30 years to 
egulate the interstate services of the Bell System, the FCC 
constantly kept informed of the Bell System's interstate 
perations through continuous acquisition of basic factual data 
nd its prompt analysis. 

The Commission also concluded that regulating the Bell 
ystem is a big job, but is simplified by reason of the System's 
nified organizational structure. 

Hundreds of reports on interstate operations and earnings 
fe provided on a recurring basis and scores of special studies 
re conducted on request. Periodic meetings are held with the 


FCC to provide up-to-the-minute knowledge of operations and 
earnings, and the Commission maintains three field offices in 
New York City, St. Louis and San Francisco, which inspect 
and audit Bell System operations throughout the country. 

The company, on a day-to-day basis, keeps the FCC in- 
formed of the many complex factors and changing technology 
that must be taken into account in regulating a technically 
dynamic business. When necessary, rate adjustments are made 
to keep Bell System interstate earnings within what the FCC 
considers "a range of reasonableness." 

In addition, many formal investigations of particular Bell 
System services and rates have been conducted by the FCC. 
There were a number of formal proceedings in process at the 
end of last year. 

Down through the years, the FCC has been a strong advo-' 
cate of the continuing surveillance method of regulation. 

This policy has been a boon to the public's pocketbook. 
There have been numerous changes in telephone rates under 
this policy, the result of which has been an overall net savings^ 
to the public of more than SI. 5 billion annually, based on 
current volumes of business. And interstate message toll tele- 
phone rates today are 22 per cent lower than in 1940. 

There is a definite trend among all regulatory commissions,' 
both Federal and state, towards a policy of continuing surveil- 
lance of public utilities, especially for rate making, in lieu of 
the cumbersome and more costly process of formal investiga- 
tions. The trend is a result of a need for regulation to accom- 
modate itself to changing conditions just as it is necessary for 
the utilities themselves to move with the trend of technical and 
economic development. 

The chief advantage of informal, continuous regulatory pro- 
cedures is the flexibility which permits the regulatory com- 
mission to keep up to the minute on operations, earnings and 
rates and to move promptly when necessary. Such procedures 
proved to be valuable, modern, regulatory tools, increasingly 
compatible with the swift growth and complicated economic 
patterns developed by the dynamic public utility operations in' 
the United States. 

Court Upholds Policy 

The policy of continuing sm-veillance as used by the FCC 
to regulate interstate earnings of the Bell System was upheld 
recently in a decision rendered by the United States Court 
of Appeals for the 9th Circuit. Use of the policy had been 
challenged by the California Public Utilities Commission. 

And two public utilities authorities offer these views: 

Francis X. Welch, editor of Public Utilities Fortnightly, be- 
lieves the "increasing complexity of regulation will require 
constant regulation — regular reporting, informal conferences 
and settlements." Fred W. Henck, editor of Telecommunica- 
tions Digest, says "there are many imponderables in regulation. 
In the long pull, we can expect a mixture of what we have now 
(continuing surveillance and periodic investigations) ." 

Living With Regulation 

The Bell System has lived with state regulation for more 
than half a century and with Federal regulation for more than 
30 years. There are clear necessities for regulation, both from 
economic and legal standpoints, and we recognize them. 

In a recent address in Michigan, A.T.&T. Board Chairman 
Frederick R. Kappel said ". . . communications service to the 
general public should be under public regulation." 

"The ideal situation," he said, "would be one where we who 
operate this regulated business would do our job so well that 
the regulators wouldn't have anything left to regulate. This is 
our goal and it is just as realistic and important as any I 
could mention." It means, Mr. Kappel emphasized, that we 
who manage the telephone business should have a sense of 
responsibility for the public interest that is just as strong as 
that of the most zealous public servant. 

Our acceptance of regulation, Mr. Kappel added, "does not 
mean that public authority should try to manage communica- 
tions service ... I think the evidence is conclusive that private 
enterprise management, working with reasonable freedom under 
•egulation, has given this country consistent leadership in com- 
nunications. I am confident also that this leadership will be 
naintained as long as the same conditions prevail." 

As long ago as 1908, then A.T.&T. President Theodore N. 
/ail, the man who did so much to shape the organization and 
x)licies of the Bell System as we know it today, suggested 
;ovemmental regulation of our business. 

When regulation by commission was introduced, Mr. Vail 
aid that control by such a body "had many advantages over 
hat exercised through legislative bodies or committees. To 
ncourage the highest possible standards," Mr. Vail continued, 
'regulation should allow rates that will warrant the highest 
Imges for the best service, some reward for high efficiency in 
idministration, and such certainty of return on investment as 
I'ill induce investors not only to retain their securities, but to 
apply at all times the capital needed to meet the demands of 
le public." 


The Policy Applies Today 

Mr. Kappel has reaffirmed this policy: 

"A business like ours, which doesn't have competition in the 
same degree as many others, has to be regulated. But that 
doesn't make us different from other people ... we too need 
freedom — under regulation — to do our very best." 

Concerning the current FCC investigation of the Bell Sys- 
tem's rates for interstate services, which got under way last 
month in Washington, D.C., Mr. Kappel has expressed con- 
fidence in the outcome. He told shareowners at last month's 
annual meeting that A.T.&T. would do everything possible to 
help the proceedings move swiftly and would do "our utmost 
to demonstrate the continuing need for earnings in the range 
of eight per cent." 

In the course of the investigation, the Bell System also 
wants to earn public understanding that: 

• Our business has been and will continue to be operated 
in the public interest. 

• Our reason for being as a business is to serve our cus- 
tomers — not just with service that is good technically, but with 
service genuinely responsive to the wants and needs of the 

There is overwhelming evidence that the U.S. system of 
entrusting the development and operation of the communica- 
tions services to private enterprise under public regulation 
has been effective. Telephone service has expanded rapidly - 
the Bell System's intei-state services have grown more than 
ten per cent a year. Service has improved and new services 
have been introduced. 

The chief testimony to the success of this arrangement is 
the general agreement around the world that the United States 
has the best telephone service. Much of the credit, of course 
belongs to Bell System scientists, managers and employees 
But there is little doubt that unenlightened and oppressiv( 
regulation could have drastically hamstrung our efforts. 

Regulation is an evolutionary process. It is necessary fo 
regulation to accommodate itself to changing conditions jus 
as it is necessary for the utilities themselves to move with thi 
trend of technical and economic development. The classica 
concept of a public utility as a sheltered natural monopoly 
protected from area competition and, therefore, requiring somi 
form of government controls to protect the consuming and in 
vesting public has been changing rapidly in recent years. Ad 
vances in communications technology — microwave, satellites 
electronic switching, computers — are providing increasing com 
petition to and among common carriers. 

Time for Change in Concept 

This increasing competition has taken away much of the 
shelter communications common carriers may have enjoyed 
and has greatly increased their risks. Regulatory concepts, it 
follows, need to be adjusted to the changing character of regu- 
lated utilities. There is need for continuing revaluation of the 
concept of what constitutes a reasonable rate of return. 

There is no slide-rule formula for computing the reasonable- 
ness of earnings. The determination of an appropriate earnings 
level is a matter of broad, informed judgment. 

But the need for Bell System earnings to be comparable 
to those of alternative investments was emphasized in written 
testimony recently presented by witnesses in the FCC's rate 

F. J. McDiarmid, manager of the Securities Department of 
The Lincohi National Life Insurance Company, commented: 

"Regulation should not be so restrictive in its thinking that 
the utility is prevented from earning on its common equity 
at rates comparable to the alternative investments in other 
progressive well-managed firms. Only on this basis will the 
utility be able to attract funds fiom insurance companies and 
other investors over the long run and provide service to cus- 
tomers when needed." 

Bell System and the Economy 

Dr. Paul W. McCracken, formerly a member of the Presi- 
dent's Council of Economic Advisers and now professor of 
business administration, University of Michigan, stressed 
these points: 

• "The objectives of economic policy, inevitably evolution- 
'ary in character, do quite explicitly commit the government 

to use all of its programs to attain maximum employment, 
production and purchasing power. 

• "We are facing a period when the economy must grow 
at an unprecedented rate if jobs are to be created rapidly 
enough to absorb our fast-growing labor force. 

' • "The dynamic processes by which our economy has organ- 
ized itself to achieve progress by holding out the lure of higher 
rewards to those who lead the parade . . . impose corresponding 
profit penalties (and even extinction) on those who lag be- 

' Dr. McCracken also noted that national policy has been 
'"to promote maximum employment, production and purchas- 
'ing power." He said there can be little doubt that "the total 
contribution of the Bell System to the vitality of our economic 
system is quite explicitly germane to the regulation issue." 

Looking backward briefly, we trace 
the evolution of the growing 
array of new products and services 
which are making telephone 
service more convenient, more 
versatile and more valuable 

a decade of new products 

William S. Brown, Jr., Product Marketing Supervisor 
Marketing Department, A.T.&T. Co. 

■ After World War II and the conflict 
in Korea, it was apparent to all 
industry that a new day indeed had 
dawned. After years of wartime austerity 
people were no longer satisfied with 
ordinary products which merely per- 
formed a function well. It was not enough 
for manufacturers to re-tool their plants 
from production lines for tanks, guns 
and aircraft engines to lines for auto- 
mobiles, refrigerators and washing ma- 
chines. The customers wanted some of 
the "trimmings" they had been so long 
denied. They were ready for automobiles 
with new and daring body designs, new 
and refreshing colors, automatic gear 
shifts, FM radio. In their new homes 
they wanted air conditioning, television, 
high fidehty music, back-yard swimming 
pools and barbecues; more country clubs, 
better eating places. For their travels 
they wanted faster, more comfortable air- 
liners serving luxury meals. 

To be sure, some of these wants were 
created by the things themselves — by the 
products of accelerated technologies. The 
telephone industry was no exception. 
For several post-war years the Bell 
System's energies were devoted — neces- 
sarily — to fulfilling the fundamental 
mission of the business: simply to provide 
basic telephone sei-vice for everyone who 

wanted it; and there were hundreds of 
thousands waiting. By the time that 
tremendous backlog had been cleared up, 
new things began to emerge from Bell 
Telephone Laboratories. And the offer- 
ing of these new things was the reflection 
of a major change in p)olicy in our 
approach to serving the telephone 

Frederick R. Kappel, chairman of the 
board of A.T.&T., in his book Vitality 
in a Business Enterprise, wrote: "... 
The Bell System has a big new goal. 
For more than eighty yeai's we have 
been working to bring the arts of trans- 
mission and switching to the point wherel 
we could serve everybody over a big, 
reliable, basic network .... This was the 
first necessity, and it has taken that long. 
But now we have reached that point 
and we want to take off from there. 

"So we have a new goal. 

"I can describe it in a very few words. 
It is to give our customers the broadest 
possible range of choice in services avail- 
able through our network, and I mean a 
range of choice that will be fully com- 
parable to the choices or options offered 
consumei-s by non-regulated, competitive 
industry. . . ." 

Although these words were published 
in 1960, they actually re-stated a policy 


Touch-Tone Trimline phone, 1966 

which already had been formed and 
actively pursued for several years. In 
the early 1950's, the decision had been 
made to create an entirely new telephone 
set with a new shape and a new size; 
it was called the 500 set. Since we knew 
that our customers then wanted some- 
thing more than just a black telephone 
in one location in the home, we hastened 
to fill the need. The public had refriger- 
ators, stoves, cars, radios in a wide choice 
of colors; why not telephones? In 1954 
we brought out the 500 set in a range 
of decorator colors with matching spring 
cords. Sales of the new sets demonstrated 
customers' readiness to accept new and 
refreshing things in telephones, too. 

Almost coincident with the introduc- 
tion of color, a new Merchandising 
Department was formed at A.T.&T. in 
New York. At first, emphasis on sales 
of the color sets was so great that many 
people defined "merchandising" simply 

as selling telephones in colors. That may 
have been true to some extent, but it 
was a matter of emphasis only; for, by 
1956, product testing was well under way 
on a number of other new products and 
services. Prominent among these were 
the Home Interphone, PrincessB' phone,' 
noisy location set, impaired hearing 
phone, a new type of private branch 
exchange switchboard fPBX) known as 
the 756 which utilized crossbar switches 
and "common control" similar to the 
newer central offices, a new key telephone 
system, a special emergency reporting 
phone and educational television. During 
the next couple of years, many of these 
were introduced on a "fully available" 
basis to the Operating Companies, and 
were soon joined by the Call Directors' 
and direct inward dialing (DID), which 
permits incoming calls to large business 
offices to be dialed directly to extensions 
without going through the PBX operator. 




Princess phone 



By 1959 much of the marketing test 
work of earlier years was becoming fruit- 
ful, and the still-new Merchandising 
departments throughout the Bell System 
were being re-grouped under the more 
general name of Marketing. At about 
that same time, Mr. Kappel remarked, 
"We are facing competition in science, in 
technical development, in the services we 
devise and offer, in the way we price 
them, in our skills of marketing and 
salesmanship, in the character and de- 
pendability of our service every day and 
every hour." The Bell System was now 
committed to a full-scale, full-time pro- 
gram of selling its products and services 
— and devising new ones to sell. The 
motive was to meet our obligation to 
provide complete, up-to-date communica- 
tions services with, as Mr. Kappel had 
said earlier, "the broadest possible range 

of choice" and also to meet competition 
for the customer's dollar in the nation's 
market places. 

The Princess Phone 

One of the firet System-wide programs, 
the introduction of the Princess tele- 
phone, was begun in 1959. Now a com- 
mon-place item in the telephone line, the 
graceful little telephone then was a 
radical departure from traditional tele- 
phone design. In that same year we also 
introduced a speakerphone for hands- 
free calling, another new console for 
PBX attendants, the Bell Chime* ringer, 
Data-Phone* * data communications 
service, the Bellboy® pocket signaling 
set and the automatic call distributor 
which automatically distributes incoming 
calls (without a switchboard attendant) 

Trademark of the Bell System 
-Service mark of the Bell Systen 


Touch-Tone ccilliiii^ 


to many phones such as those for shop- 
by-phone sales clerks. 

In 1960 still more new products began 
to roll from Western Electric's assembly 
lines to the Bell Companies as the 
overall Marketing effort gained momen- 
tum. We had by this time produced and 
offered a new speakerphone which was 
superior to the earlier model; the elec- 
tronic artificial larynx, which gave a 
voice to those made voiceless by nature, 
accident or surgery; a new PBX console 
and a newly-designed universal switch- 
board; farm interphone and improved 
home interphone systems. National 
Yellow Pages service began to emerge, 
allowing major nationwide subscribers to 
the service to place a single order for 
multiple listings in any number of cities. 
In 1960 Western Electric production of 
Princess phones topped 1,800,000, an all- 
time production peak. By the end of last 
summer, more than 4,000,000 Princess 
phones were in service. 


A new service for business called 
centrex arrived in 1961, offering in-out 
dialing, call transfer, console operation 
and other attractive features. The equip- 
ment for the new service could be located 
on telephone company premises, and, 
therefore, save space for the customer; 
but it could also use the customary PBX 
equipment located on customer-owned 
space if so desired. That same year saw 
the introduction of WATS (Wide Area 
Telephone Service) and telpak, a pack- 
age offering of broadband communica- 
tions channels carrying many different 
kinds of services, all at a flat rate. 

By 1962, we had decided that our 
"incidental" station equipment, too. 
should be available in colors, and so 
cables, terminals, buzzers and apparatus 
boxes were offered in light gray and 
ivory. We also introduced a line of auto- 
matic dialers, including the RapidiaP 

■Registered trademark of McGraw-Edi; 



Card dialer 


Ediicalional lelerision 

Dala-Phone tiansmiuer jor cardiogn 

Panel plione 


repertory dialer, a magnetic recording 
device with a capacity of 290 names and 
numbers, and the card dialer, which 
used small, plastic pre-punched cards 
to send dial impulses by means of a 
special mechanism in the phone itself. 
To fill an evident need for a compact 
dial switching system to replace small 
manual PBX systems, we oflfered the 20- 
40 dial pak, the name being derived from 
the range in the number of telephones 
that it can serve. The system offered 
in-out dialing to a limited number of 
selected telephones and two-digit com- 
munication between phones. Coincident 
with the 20-40 ( but not associated with 
it ) , business customers were offered the 
Spokesman* transistorized telephone 
loudspeaker designed for small group lis- 
tening. We also joined the trend to built- 
in appliances with a recessed panel phone 
having a cord retracting on a spring reel 
and an attractive, newly-designed switch- 
hook. In the fall of 1962 we produced a 
full marketing program for educational 
television. This new service offering was 
presented to the Bell Telephone Compa- 
nies with the aid of a documentary color 
film covering the many such services 
being offered throughout the country. 

Touch-Tone'^ Calling 

The year 1963 may well remain con- 
picuous in Bell System history for the 
introduction of Touch-Tone calling. This 
new service came out of the testing stage 
and into public use as the year faded into 
1964. Many millions of visitors to the 
New York World's Fair in 1964-6.5 
Decame acquainted for the first time 
vvith Touch-Tone calling, since all the 
Fair's phones were equipped with the 
new push-buttons in place of dials. 
V^isitors also found the buttons much 
aster than the dial in making a call. 
IDevelopment of the new service has 
sroceeded rapidly; by the middle of 1965 
ve had installed 315,000 Touch-Tone 
)hones and passed the three-quarter-mil- 

lion mark at the close of the year. By 
1970, we hope to offer Touch-Tone 
calling to 90 per cent of our customers, 
and plan to make it 100 per cent with 
the projected completion of System-wide 
electronic switching by the year 2000. 

Although 1963 is memorable for the 
advent of Touch-Tone calUng, that year 
also saw many other new service offerings. 
Among these were another new PBX. 
the 757A, which, like the 756, employed 
crossbar switching and common control; 
the No. 101 electronic switching system, 
which provided great flexibility in choice 
of custom service features; two new auto- 
matic call distributor systems; a new 
handset for noisy locations; municipal 
reporting service for fire, police, ambu- 
lance and other town and city functions; 
school-to-home service to enable shut-in 
students to attend classes via telephone: 
tele-lecture, which provides a telephone 
hook-up between a lecturer at one location 
and student audiences in many distant 
places; and automatic answering systems 
— a new Electronic Secretary^ and Code- 
a -phone.' 

In 1964 the Bell System introduced 
business interphone, combining the 
hands-free speakerphone feature and a 
system with a capacity of from two to 
18 dial codes with up to five extensions 
on each code, and providing conferenc- 
ing arrangements. It found a ready 
market among hospitals, clinics, garages 
and many small business firms. Picture- 
phone** see-while-you-talk service made 
its debut between New York, Chicago 
and Washington ( installed in special 
public booths) and at the World's Fair. 
That year also saw introduction of the 
guest dial pak for small motels and the 
offering of the Magical' repertory dialer. 

'Trademark ot the Bell System 

^Registered trademark of Automatic Electric Co. (1962) 

■'Registered trademark of Code-a-phone Electronics Corp. 

'Registered trademark of Da-^a Corp. 

"•Service mark of the Bell System 


Trimline telephone 

Ciill-A-Malic dialer 

Trimline® Telephone Set 

In 1965 came the fruition of a long 
period of design, trials and testing when 
the Trimline telephone was first offered. 
In the Trimline phone, the dial, receiver 
and transmitter are all built into one 
small, lightweight unit which rests in 
the hand. The new phone was introduced 
in Michigan early in August of 1965, 
and before the month had ended, orders 
for Trimline phones exceeded the initial 
forecast by several times. In fact, Michi- 
gan's successful sales program caused a 
complete reforecasting of the entire mar- 
keting program for the Trimline tele- 
phone. Indiana Bell began selling it 
September 1, and was followed by the 
Cincinnati and Suburban, Ohio Bell and 
Northwestern Companies in the fourth 
quarter of 1965. Many of the other Bell 
Telephone Companies are offering the 
new Trimline phones in 1966. The 
Touch-Tone calling version of the Trim- 
line phone will start to become available 
late in 1966. 

During 1965 we will also introduce a 
hospital interphone system, the Call-A- 
Matic® dialer with Touch-Tone dialing 
and the new Alarm Reporting Telephone. 
(See "In The News" page 57) 

This brief, retrospective view of a 
decade or so of new products is not by 
any means a complete list. That is 
merely a result of the restrictions im- 
posed by brevity itself. Behind each new 
product or service, there is the story of 
much hard work by many skilled and, 
imaginative people — people in the Bell 
Telephone Laboratories, in Western Elec- 
tric, in all the Bell Operating Companies 
and at A.T.&T. And the work goes on. 
Many more new products and services, 
and new models of existing products, are 
constantly under development and re- 
finement so that these, too, can be offered 
to our customers. In the pages immedi- 
ately following, we look into the future 
where we can discern the outlines, at 
least, of still more new things. 


Picturephone see-while-you-talk service 


The preceding pages chronicle briefly 
the past decade of telephone products. 
Here, in a forward glance we find seeds of 
future achievement in present techniques 


Recently a well-known editor and 
writer of science fiction remarked that 
his trade, fathered about a century ago 
by Jules Verne, was rapidly dying out. 
Fiction, he said, has been overtaken by 
fact at such an accelerated rate that peo- 
ple are now inured to marvels — marvels 
that appear in the daily press, not in 
magazines like the old Amazing Stones. 
The best of science fiction was based on 
extrapolation: projection by inference 
into an unexplored situation from obser- 
vations in an explored field. The gap be- 
tween the explored and the unexplored 
has narrowed to the point where the sci- 
ence fiction writer's projections are little 
more astonishing than the latest an- 
nouncement from any one of the na- 
tion's industrial or academic laboratories. 

What follows here — a brief examina- 
tion of new telephone products and serv- 
ices for the next decade or so to come — 
i.ilU neither into the category of fiction 
11(11 that of fact. It is, rather, extrapola- 
tion as defined above. Some of these 
things are on the verge of realization; 
others are less than accomplishment but 
mciic than dream. All are based solidly 
on present technology, and are being de- 
veloped in response to contemporary 
customer demands. While most do not 
have specific date tags attached, they 
will probably be offered some day, quite 
prosaically, in telephone company tariffs. 

There are, for instance, the compara- 
tively new techniques of micro-miniatur- 
ization in thin film and integrated circuit 

Microscopic view of ihin film integrated cir- 
cuit under test at Bell Telephone Laboratories. 

design. These are not, and never will be, 
tariff items in themselves, any more than 
is the transistor in itself; but they will 
lead to new kinds of tangible hardware. 
We can foresee a complete line of equip- 
ment to be located on customer premises 
— PBX consoles, call distributors, inter- 
com systems, the telephones themselves 
— which utilize the new micro-miniature 
solid state electronics. These will not 
only make possible much more compact 
design of the visible equipment but will 
also provide great flexibility and 
maintenance: the electronic components 
are tiny, assembled units, which are 
plugged in, and are disposable if trouble 
should occur in any one of them. The 
faulty unit — switch, logic circuit, mem- 
ory unit, amplifier, whatever it may be 
— is simply unplugged and a new one 
substituted in an instant. Micro-minia- 
ture techniques enable engineers to put 
all the elements of a complete electrical 
circuit — an amplifier, for example — in a 
space about the size of a match head. 
Moreover, these are encapsulated in plas- 
tic .so that they are rugged and have a 
new order of reliability. Simple and ef- 
ficient modular design is one logical 
product of these miniature electronic 
building-blocks. In the Touch-Tone® 
Trimline* telephone, tiny thin-film cir- 
cuits may be used for the dialing me- 
chanism. "Mechanism" is perhaps no 
longer an accui'ate word in this appli- 
cation, since the process of calling a 
number will be entirely electronic, in- 



volving no moving parts. 

This will be true also in key telephone 
systems. Multi-line telephones will have 
non-mechanical line-selection buttons — 
perhaps capacitor-operated touch buttons 
similar to those now found in many self- 
service elevators. Furthermore, key tele- 
phone systems will be integrated in 
package designs — much as PBX systems 
are now being offered as service pack- 
ages, rather than as lists of their compo- 
nent hardware (See BTM, Summer '63) . 
Operation of PBX and answering service 
consoles will be simplified and me- 
chanized. Automated might be a better 
word, for here again the attendant's job 
will be made easier through electronic, 
not mechanical, means. 

Among other things now visible on the 
horizon is a complete family of sophisti- 
cated, practically effortless automatic 
dialers. The repertory of numbers will 
probably be stored in thin-film circuit 
units, and such present repertory devices 
as punched plastic cards, magnetic tape 
or drums may be obsolete as the dino- 
saur. Obsolete also will be present in- 
stallation methods — and this applies to 
all equipment on customer premises. A 
systems engineering approach to all such 
installations is part of the shape of things 
to come — even for installations in a 
single room, be it office or home. 

"Effortless" is one of the operative 
words in the preceding paragraph. One 
abiding truth, in the future as in the 
present, is the fact that the customer is 
the most important person in our busi- 
ness. Service for the customer is our 
reason for being. Immense amounts of 
engineering skill will be spent — and are 
now being spent — on making that service 
varied, flexible and, above all, simple and 
easy to use. There are now in progress 
trials of Custom Calling Services, offer- 
ing new service features individually or 
in a variety of packages. One feature is 
Speed Calling for abbreviated dialing), 
which, under present arrangements, en- 
ables the customer to reach any of eight 

frequently called numbers by dialing 
only one digit instead of the usual seven 
or ten. By reducing the number of opera- 
tions necessary to establish a call, such 
developments may some day lead to di- 
rect station selection, whereby a large 
number — perhaps any desired number — 
of phones can be reached simply by 
touching a button. 

Other new service features are now 
somewhere between drawing board and 
laboratory test bench. Suppose, for in- 
stance, that you are in New York and 
want to make a call to someone in Sacra- 
mento. Perhaps you get a report that all 
circuits to Sacramento are busy, or per- 
haps the individual phone on the West 
Coast is busy. Sometime in the future 
electronic equipment will automatically 
make a second and third attempt to 
reach the number without any further 
effort on your part. Suppose also that 
your call is part of a telephone confer- 
ence involving several people. Future 
service features will offer you the option 
of setting up conference arrangements 
at any and all distances — interoffice, 
inter-building, inter-city, interstate — 
quickly, simply, and with improved 
audio-visual links which can be en- 
visioned as an extension of today's Pic- 
TUREPHONE see-while-you-talk service. 

Still with the customer's convenience 
in mind, engineers are looking toward 
fulfilling the potential of Touch-Tone 
calling by expanding the phone's capa- 
city to 12, perhaps even 16 buttons, which 
in turn would expand the number and 
kind of things you will be able to do 
with it. Today, in a few places and on 
a limited basis, customers with Touch- 
Tone phones can pay bills and keep 
their bank accounts straight by tapping 
digits into the bank's computer. Tomor- 
row, they may be able to do the day's 
shopping at an automated, computerized 
supermarket without leaving the easy 
chair in the living room. 

Most of the things described above 
have the slightly romantic aura of blue 


sky about them. They are desirable and 
pleasant to contemplate. Engineers, how- 
ever, consider them not only desirable 
but also inevitable. Equally inevitable to 
the people who must do the planning 
and figure the cost are other things be- 
hind the scenes — things the customer 
may never see or even know about. The 
huge Bell System network has always 
been much like the iceberg: only a frac- 
tion of the whole is visible. Among those 
technical necessities not visible to the 
customer will be such things as wide- 
band and extra-wide-band switching: 
sophisticated techniques which will be 
needed to quickly rearrange and effi- 
ciently utilize the tremendous communi- 
cations capacity and frequency ranges 
of future broad-band communications 
channels. The customer will experience 
directly other new features like the 
Automatic Intercept center, where a con- 
tinuously-updated computer will tell 
him, via voice-response, of any change 
in the number he is calling. Similarly, 
a Semi-automatic Information Bureau 
will provide him with rapid information 
service; an operator, handling his re- 
quest, queries a computer through a 
combined keyboard and cathode-ray tube 
display device, and gives him the desired 
number more quickly and efficiently 
than she can now by flipping the pages 
of an information directory. The direc- 
tory which the customer uses at home 
or in the office may be printed directly 
from computer tape. These last three 
items — intercept, information and direc- 
tory printing — are already under trial in 
some parts of the Bell System. 

The computer — that ubiquitous tool of 
the new electronic age — will find increas- 
ing employment behind the scenes of the 
telephone business as it will in many 
others. It will be the heart of a System- 
wide business information system (B.I.S., 
BTM, Summer '65). With the develop- 
ment of computer programs to analyze 
basic data on economic and population 
growth, the computer will be used to 

help locate and time the construction of 
new central offices and wire centers. It 
will also contribute its microsecond cal- 
culations to studies for new trunk routes 
and to engineering studies for future 
communications needs. Through time- 
sharing techniques which are now in ac- 
tive use, centralized computers will serve 
many users in many places and with 
many different kinds of problems. And 
all the raw materials of communications 
— voice, data, picture — may be carried 
across the country by means of new 
transmission systems such as waveguides 
or pulse code modulation. Both of these, 
now in experimental stages, have clearly 
demonstrated their immense future po- 
tential. And, of course, there are the 
near-science-fiction capacities of the 
laser, which almost daily shows through 
laboratory doors the shapes of future 

The future also holds new shapes for 
such familiar things as the telephone 
itself. There will be significant improve- 
ments in what is known today as 
the speakerphone — instrumentalities for 
hands-free calling. And with those im- 
provements may come telephones that 
don't look like telephones at all. They 
may, in fact, not be visible at all. Engi- 
neers, practical though they must be, 
today can shrug with Gallic eloquence 
and say that, technically, there is no 
reason why transmitter and receiver 
should not be concealed somewhere in 
living room, study, kitchen, or office — 
in a piece of furniture, a ventilator or 
almost any other fairly permanent part 
of the customer's physical surroundings. 
There are even indications that some day 
we may have equipment entirely free of 
wires — PBX consoles and telephones. So, 
the next time you see the Man from 
U.N.C.L.E. imclip a slender, pencil-like 
object from his pocket, extend the tip an 
inch or so and say softly, "Channel D, 
please," you may smile in tolerant 
amusement if you wish, but don't laugh 
too loudly — it could happen. 


-V ■•■'-'^i'f^'^^ 


Harassing, obscene, abusive and 
threatening calls are an increasingly 
serious problem — one which 
the Bell System is trying to combat 
in every way possible 


Hubert L. Kertz, 
Vice President. Operations, A.T.&T. Co. 

The relative calm of the daily routine 
of a housewife is abruptly shattered. Sud- 
denly it starts — with just a ring of the 
telephone — an obscene telephone call. 
And whoever it is keeps on calling. Again 
and again the telephone rings, and each 
ring signals her increasing fear. The pas- 
sage of time — from minute to minute, 
hour to hour — becomes a dreadful crawl 
from call to call, from terror to panic. 
Who is it; where is he; how long will he 
keep calling; what else might he do; what 

could she do to stop this frightening, 
anonymous voice? 

Is this woman's plight overstated? It is 
not. Nor is it a singular, one-of-a-kind sit- 
uation. It symbolizes an increasingly seri- 
ous problem — one which the Bell System 
is trying to combat — the growing number 
of annoyance calls received by our cus- 
tomers. The number of complaints about 
such calls has increased steadily in recent 
years and it can be assumed that many 
more customers receive similar calls but 
never report them. 

Annoyance calls can be roughly di- 
vided into three groups: abusive calls 
(such as the one cited above), including 
obscene, harassing, threatening or inter- 
ference calls; commercial solicitation 
calls, including sales, promotional soUci- 
tation or survey calls; or calls that are 

When such calls are received, when the 
telephone becomes an instrument of an- 
noyance, unpleasantness or terror, it is a 
matter of serious concern to us. Remov- 
ing sources of customer irritation is an 
integral part of providing high quality 
service to our customers. 

Thus, to the stated and oft-quoted Bell 
System service policy of providing the 
best possible telephone service, A.T.&T. 
has recommended that an expressed pol- 
icy regarding annoyance calling should 
be that the Bell System will use every 
available legitimate means to combat an- 
noyance calling. 

Abusive calls 

Abusive calls are the most distressing 
to a customer and constitute the most se- 
rious problem. Calls in this category are 
made with the intent to frighten, annoy 
or embarrass the called customer. They 

include obscene, harassing, threatening 
and interference calls. The interference 
call, for example, is made with the intent 
of hindering the called person in the use 
of his service by calling and not breaking 
the connection. 

Substantiating the growing seriousness 
of this abusive call problem is the fact 
that, since 1955, states have enacted or 
broadened statutes penalizing one or 
more varieties of such calling. A majority 
of states, plus Canada, now have such 
criminal statutes. If the calling number is 
identified, the telephone company can, 
under most circumstances, properly re- 
veal it to the person called or to law en- 
forcement authorities with the consent of 
that person. 

Thus, there appears to be no com- 
pelling reason why a Bell Operating 
Company should not attempt to identify 
the line from which an abusive call is 
made if the called customer so consents. 
And there are significant reasons why 
such calls should be identified — not the 
least of which is the hope that successful 
identification of the calhng line and the 
ensuing publicity might substantially de- 
ter abusive calling by removing the cloak 
of anonymity which now liides and em- 
boldens most callers. 


Procedures have been devised to rein- 
force our efforts in dealing with this es- 
pecially difficult problem. Much of the 
activity in deaUng with these annoyance 
calls takes place "behind the scenes" — in 
areas where specific technical procedures 
have been developed which the customer 
never sees. But one place where the cus- 
tomer is aware of what is being done is 


in the telephone company business office; 
here is where his complaints should come. 

The receipt of abusive calls is a serious 
matter to us, as well as to the customer. 
He must be made aware that we are con- 
cerned and that we will make every ef- 
fort to solve his problem and help correct 
misuse of telephone service. Business of- 
fice people have a responsibility to indi- 
cate to the customer that we have a gen- 
uine and sympathetic interest in his 
problem, that the problem is understood 
and that we do want to — and frequently 
can — do something about it. 

What happens when the customer calls 
the business office? The service represent- 
ative, by intelligent questioning, must de- 
velop the facts needed to make a proper 
analysis of whatever steps are necessary 
in solving any particular complaint. The 
discussion with the customer should gen- 
erally result in the service representative 
having developed the following informa- 
tion: frequency of calls; time of day the 
calls are received; variations, if any, in 
the calling pattern; relationship of calling 
time to members of the family being at 
home; or any recent publicity in news- 
papers or magazines about a member of 
the family. Evaluation of this informa- 
tion will aid the representative in deter- 
mining what further steps are necessary 
to solve the customer's problem. 

When only one or two abusive calls 
have been received and the threat of bod- 
ily harm is not involved, our experience 
is that such calls are usually discontin- 
ued after a few attempts. This is particu- 
larly true if the person called refuses to 
give the caller any satisfaction and hangs 
up immediately. 

If there have been a number of calls 
over a period of time, the service repre- 
sentative may request the customer to 

keep a record of all abusive calls re- 
ceived during the next several days, and 
an appointment is made to discuss the 
logged information. During the log-keep- 
ing period, we often find that the calling 
has stopped, that it was a temporary con- 
dition. In this case, if the customer 
agrees, the case is considered closed, with 
the customer being assured of our cooper- 
ation if the calling should start again. 
Where the customer reports receiving 
very few calls, between one and three 
and following no apparent pattern, dur- 
ing the logged period, a temporzu-y or 
permanent number change or transfer 
may be suggested to him. 

If the customer has recorded more than 
three calls on the log, and if the informa- 
tion developed indicates that it is ap- 
propriate, there will be times when an at- 
tempt will be made to identify the calling 
number. In these cases, consent of the 
person called must first be obtained. The 
ensuing action may involve the Plant, Se- 
curity and Legal Departments. Great 
care is taken at each step in the process 
to fully cooperate with the customer and, 
with his authorization, to provide full in- 
formation to the appropriate law enforce- 
ment authorities. 

When a request is received to identify 
a call after the receipt of a serious threat 
— bodily harm, kidnapping or damage to 
property — immediate action is taken. 
Recognizing the seriousness and urgency 
of the situation, we will cooperate to the 
fullest possible extent as swiftly as we 
possibly can. 

Sales and Survey Calls 

Another source of annoyance calling is 
found in the intrusive or inconsiderate 


sales, promotional solicitation or survey 
calls. Included in this category are calls 
placed indiscriminately to residence cus- 
tomers in an attempt to sell a variety of 
isroducts or services or to request infor- 
mation for research purposes. Such calls 
are annoying when received at incon- 
venient times, when the caller is discour- 
teous or overly aggressive, when the per- 
son called objects to receiving any calls 
of this nature, or when the person called 
objects to the nature of the questions 
asked by an interviewer. 

However, telephone sales calls between 
businesses are part of the day-to-day rou- 
tine through which our economy func- 
tions. When used properly, the telephone 
is an effective sales tool, and business ex- 
pects and appreciates this use. 

Telephone solicitation of our residence 
customers is another matter and can, if 
abu.sed, constitute a serious annoyance 
call problem. Many of these calls annoy 
people and intrude on the privacy of 
the home. 

But distinctions must be made between 
these calls and the "abusive" calls, as de- 
fined above. Most commercial solicitation 
calls are made for the legitimate purpose 
of selling a product or service, and the 
identity of the caller or his product is 
disclosed to the person called, whereas 
most abusive calls are made for an il- 
legitimate, improper or indecent purpose 
and are anonymous. The telephone com- 
pany is required by law to provide tele- 
phone service for any lawful purpose — 
and selling by telephone is, of course, 
lawful. Yet there is a One of good taste 
which, everyone agrees, selling and so- 
liciting by telephone should not cross. 
Telephone selling, after all, should always 
aim at the mutual advantage of buyer 
and seller. 

What Can Be Done 

What, then, can be done? Generally, 
the best remedy for handling a solicitor 
who is rude or persistent is simply to 
terminate the call. However, at the same 
time we will do all we can to help our 
business customers improve their tele- 
phone selling so that it will not annoy 
our other customers. When it is apparent, 
for instance, that complaints are being 
received from numerous customers con- 
cerning a particular solicitor, the business 
office manager may contact the caller di- 
rectly or refer the case to Marketing De- 
partment people who are trained in deal- 
ing with customers who make telephone 
sales calls. 

Upon receipt of a complaint about a 
sales or solicitation call, for example, 
these people would visit the caller, point 
out that he has offended his potential 
customers and explain that there is a 
proven, successful program for planned 
and proper use of the telephone in selling 
which stresses such requirements as sen- 
sible selection of prospects, timeliness, 
truth and good manners. This program 
works to the mutual advantage of all con- 
cerned ( seller, buyer and the telephone 
company ) by eliminating the cause of 
the complaints, while improving the re- 
sults of the customer's selling efforts. 

Misdirected Calls 

The last of the categories of annoyance 
calls, misdirected calls, are those where 
the caller attempted to reach someone 
other than the person who actually re- 
ceived the call. Generally, they result 
from incorrect dialing of the number. 
Thev are also, on some occasions, caused 



by the number appearing in error in an- 
other customer's advertisement or being 
listed in a current directory under a 
prior customer's name. 

Where attempts to reach someone who 
had the number previously are at fault, a 
number change with an intercept of calls 
may be offered. However, it has been our 
experience that such conditions are usu- 
ally temporary in nature. 

In those cases where the customer's 
number appears in error on another cus- 
tomer's stationery, cards or in an adver- 
tisement, the service representative will 
contact the customer responsible for the 
misprinted information and request that 
its distribution be discontinued. The cus- 
tomer receiving these calls in error will be 
offered a number change, with an inter- 
cept, where the volume of calls being re- 
ceived constitutes a sufficient annoyance. 

And, finally, there are those cases in 
which the customer's current number is 
similar to another and frequently called 
number, such as a cab company, hospital 
or fire department. In this case, their 
number is changed and their former num- 
ber is marked to prevent reassignment. 

Summing Up 

Highlighting the seriousness which we 
attach to these annoyance call com- 
plaints, Frederick R. Kappel, chairman 
of the board of A.T.&T., speaking in the 
1965 Annual Report, summed up the Bell 
System position which stands behind 
many of the concrete steps and policies 
discussed here: 

"A considerable number of people have 
been troubled by receiving harassing, 
abusive, obscene or threatening telephone 
calls. We want it known that in every 

instance we are anxious to help and will 
do so to the limit of our ability. Such 
calls violate state laws and we are 
strongly in favor of prosecution of viola- 
tors. Sometimes the problem is difficult. 
But difficult or not, we invite customers 
to ask our help. We shall take every ap- 
propriate action, and stay with the prob- 
lem until it is worked out. 

"Residential sales canvassing by tele- 
phone is also a frequent source of irrita- 
tion. So much of economic life depends 
on selling that few people would make 
absolute rules against it. However, the 
most exasperated recipient of an obnox- 
ious sales pitch is no more opposed to 
intrusive, inconsiderate telephone selling 
than we are. If people will tell us who it 
is that is bothering them ( and when sales 
calls are received this is not hard to as- 
certain ) we will do our best to help. 

"In our own sales work we are guided 
by these principles: First, only if the cus- 
tomer obtains added value should he 
buy. Second, only if the value continues 
will the sale last. Third, only if the sale 
lasts will it benefit both buyer and seller. 

"We think these are sound principles 
but in addition, real consideration for the 
other fellow is always the first essential. 
So we say again — if you are distressed by 
calls that are failing in courtesy and good 
taste, please let us know. We will try to 
improve the situation." 

This effort, and all such efforts to alle- 
viate the problem of annoyance calls, en- 
tails close coordination among all depart- 
ments of the telephone company and can 
often be an exceedingly difficult and com- 
plex procedure. The results, however, can 
be well worth the efforts — by decreasing 
such armoyance calling, the telephone 
will become, as it should be, even more 
of an instrument of service and pleasure. 


Because of our unique 

experience In the transmission of visual 

Images we are especially well 

equipped to help this 

vigorous young industry 

The Bell System 
and CATV 

CATV — Community Antemia Tele- 
vision — is one of the newest Bell System 
customers for television channel com- 
munication service. And a fast growing 
one. In the first ten years of its existence 
to 1960, the CATV industry sprouted 
from one to some 800 systems serving 
750,000 customers. The last five years 
have seen the number of systems double 
and their subscribers increase almost 
threefold. Right now, CATV is not only 

expanding in the small towns and rural 
areas where television reception is poor, 
but it is also moving into the city. 

CATV is an enterprise designed to 
bring television broadcasts into homes 
which can't get adequate reception in 
terms of quality of picture, quantity of 
stations, or both. The CATV operator 
picks signals of TV stations out of the 
air with a large antenna, amplifies them 
and pipes them to his customers. 







Bell System pole rental 
or channel facilities 

Gordon N. Thayer, Vice President, 
Planning Department, A.T.&T. Co. 

CATV first developed in communities 
situated in valleys and other places 
where unfavorable terrain prevented TV 
reception by way of conventional roof 
top antennas. The freeze imposed by the 
Federal Communications Commission, 
from 1948 to 1952, on the establishment 
of any new broadcast television stations 
added stimulus to its early growth in 
those communities not served by tele- 
vision at that time. Later, it gained ac- 

ceptance in communities served by only 
one or two of the three national tele- 
vision networks because of its ability to 
deliver a greater number of different tele- 
vision signals to its subscribers. 

Today, CATV is finding public accept- 
ance in several of the largest cities where 
the variety and quality of broadcast sig- 
nals available up to now have been con- 
sidered acceptable. Apparently, however, 
a large segment of the public wants a 


In a town where normal TV reception is poor because surround- 
ing hills block line-of-sight microwave signals from remote 
TV antennas, the CATV operator's antenna can pick up the TV 
signals from the distant transmitters. The TV signals are 
then carried via channel transmission service provided by 
the Bell System to the homes of the CATV operator's patrons. 


greater diversity of signals and superior 
technical quality, particularly where 
color reception is involved. CATV can 
provide for both of these desires. 

The Bell System's role in connection 
with the CATV industry can best be 
seen against a brief background of the 
System's experience in the transmission 
of visual images. In 1925, the Bell Sys- 
tem first provided telephotograph chan- 
nel service for the transmission of still 
pictures. As early as 1927 Bell Laborator- 
ies transmitted black and white television 
over telephone lines and had demon- 
strated color TV by 1929. 

Following World War II the television 
broadcast industry greatly expanded and 
along with it the Bell System began con- 
struction of its nation-wide communica- 
tions system for video signal transmission 
of network broadcasting. In 1964 video 
message service began with the inaugura- 
tion of commercial Picturephone see- 
while-you-talk service between Washing- 
ton, Chicago and New York. Today the 
Bell Companies also provide commu- 
nication facilities used in television trans- 
mission services for education, industry 
and the government. 

The Bell System's recent tariflf offer- 
ings of local television transmission chan- 
nels for use by the CATV industry 
represents a continuing expansion in the 
diversity of the system's television chan- 
nel service offerings designed to meet the 
special needs of its different customers. 

CATV service is distributed to sub- 
scribers in a community either by means 
of television channels furnished by the 
local telephone company or by means of 
a cable system built and maintained by 
the CATV operator. In the latter case, 
.some CATV operators prefer to con- 
struct an entire system consisting of both 
the cable and supporting pole structures. 
Other operators lease space on the exist- 
ing poles belonging to electric and tele- 
phone companies for attachment of their 
CATV cables. 

When CATV first developed in the 
early 1950's the Bell System was not in a 


position to furnish the local television 
channel service required by this new in- 
dustry. At the time the System's man- 
power and resources were being devoted 
principally to the task of trying to satisfy 
the post World War II pent-up customer 
demand for both basic and better grades 
of telephone service. At the same time 
the conflict in Korea was creating new 
shortages of copper, a basic material re- 
quired in meeting this demand. 

Although unable to provide channel 
service for CATV, the Bell Companies 
did give their assistance to this develop- 
ing industry by leasing pole space for the 
attachment of their distribution cables. 
This permitted the CATV operator to 
provide television reception service with- 
out exhausting his resoui'ces for pole in- 
vestment. The limited exception granted 
to CATV companies to use telephone 
company poles marked a major change in 
the Bell System's long-standing policy 
against pole rentals, outside of use by 
other public utilities and certain govern- 
mental agencies. 

The Bell Companies felt that the ex- 
pense and inconvenience of granting pole 
attachment privileges to CATV compa- 
nies were outweighed by the benefit to the 
public of being able to receive television 
in as many communities as possible. This 
exception for CATV attachment has 
never been expanded to permit pole at- 
tachments for other purposes, such as the 
transmission of pay-TV, wired music, or 
private communication and signaling 

Consistent with the Bell Companies' 
policy of cooperating with development 
of CATV, the pole rental charges origi- 
nally established represented merely 
token payment for use of the pole 
space involved. This was almost a neces- 
sity in the early years, as many CATV 
operators had only modest financial re- 
sources and uncertain public support 
in the smaller communities they first 
began to serve. With the subsequent 
emergence of CATV as a financially 
established industry, these charges have 

generally been revised upward toward a 
more compensatory le\ el so that the cost 
of providing such facilities is not borne 
by telephone company subscribers or in- 
vestors. Where the necessary upward re- 
vision of the rental charges was of a 
significant percentage, the total increase 
has usually been applied gradually over 
a period of two to three years. 

At the present time there is little com- 
pelling need for continuing the CATV 
pole attachment policy for the reason for 
which it was originally established. 
Broadcast television is available in all 
populous areas and the isolated commu- 
nities which originally lacked any form 
of basic television are now, for the most 
part, being served by CATV. Moreover, 
most Bell Companies are now able 
to provide channel service, at what we 
feel to be competitive and desirable 
rates, to those operators who do not want 
to carry the sizeable investment that own- 
ing their own plant would require. The 
Bell System, however, has expressed a 
willingness to continue to grant pole at- 
tachments to those CATV operators who 
want them. All CATV enterprises, there- 
fore, will continue to have a free choice 
between channel transmission service as 
offered by Bell Companies or attaching 
their own distribution cables to tele- 
phone company poles under a pole at- 
tachment arrangement. 

It has been necessary to place some 
limitations on pole attachment arrange- 
ments in order to maintain safety stand- 
ards and to fully retain the use of such 
telephone facilities for both future and 
emergency requirements of basic tele- 
phone service. As most existing pole struc- 
tures were not designed for more than 
two distribution systems, that is electric 
power and telephone, leased space for 
only one additional distribution system 
will be granted in any one area. Subse- 
quent CATV operators proposing to dis- 
tribute in the same area, will have to 
attach to poles other than those of 
the local Bell Company or obtain chan- 
nel service from the telephone company. 



To assist CATV operators who wish pole 
attachment privileges, the Bell System 
has recently standardized the appli- 
cation procedures so as to introduce uni- 
formity and consistency on a System- 
wide basis. 

In some communities, requests for pole 
attachments have been received at ap- 
proximately the same time from more 
than one CATV operator. In an effort 
to be as fair as possible to everyone 
concerned. Bell Companies have de- 
clined to assume responsibiUty for selec- 
ting the one applicant to be granted 
pole attachment privileges. It has been 
felt that this selection is a matter that 
more appropriately belongs to the appli- 
cants involved or to the municipal gov- 
ernment of the area to be served. If 
neither of these groups assumes responsi- 
bility for such a decision, the local Bell 
Company will provide channel service to 
all CATV operators who apply. 

Privileges, similar to pole attachments, 
are not extended to CATV operators 
to use underground conduits of Bell 
Companies. The extremely high cost of 
providing such underground facilities and 
the need for keeping adequate duct space 
available for future telephone service 
needs, precludes the use of these facili- 
ties by others except for certain essential 
public safety services such as police, fire 
and traffic control. The security of cer- 
tain essential communication facilities 
located in underground ducts, and the 
concern for the safety of personnel not 
trained in the special working conditions 
that exist in manholes and underground 
structures add further justification for 
this policy. Channel service will be avail- 
able from the local Bell Operating Com- 
pany where underground distribution is 

At present there are over 1,000 pole 
attachment agreements in effect between 
CATV operators and Bell Companies. 
This represents about 63 per cent of the 
approximately 1,600 CATV systems cur- 
rently in operation. 

The Bell Companies have tariff offer- 

ings in effect in 38 states that are specifi- 
cally designed to meet the channel service 
needs of CATV operators. Similar tariffs 
have been filed with regulatory commis- 
sions in several other states, but are not 
yet effective. All of these tariffs are sub- 
ject to continual review and revision by 
the Bell Companies to incorporate cost 
savings and effciencies made possible by 
the continuing improvement in tech- 
niques and equipment used to provide 
such service. Since the first Bell Com- 
pany tariff was filed in 1959, such reviews 
have brought about substantial savings. 
These savings have been reflected in cur- 
rent tariff rates which are considerably 
lower than those in effect several years 
ago. Specific tariff rates may vary from 
state to state, with each Bell Company 
making its own cost determination on a 
basis of the conditions peculiarly appli- 
cable in the area it serves and the varying 
complexities of plant construction that 
are involved. 

Generally, these tariff offerings stipu- 
late that channel service will be furnished 
to a CATV operator on a monthly charge 
basis for the primary purpose of dis- 
tributing standard broadcast television 
signals. These signals are picked off-the- 
air by the CATV operator at his antenna 
site and distributed by telephone com- 
pany channel facilities to the premises of 
the CATV patrons. 

Considerable interest has been evi- 
denced in these new tariff offerings. At 
the present time the Bell Companies 
are providing channel service for 17 
CATV systems with construction either 
under way or due to begin in the very 
near future on an additional 75 systems. 

It has often been stated that the Bell 
System is entering the CATV business. 
The provision of channel transmission 
service for use in connection with CATV 
distribution systems is considered to be a 
normal communications common carrier 
function. In furnishing such channel ser- 
vice the Bell Companies are in no way 
involved in the selection of the program- 
ing that will be made available by the 


A Bel! Company puts up coaxial cable for 
channel service provided to CA TV operator. 

CATV operator to his patrons. This is 
determined solely by the CATV opera- 
tor, who picks all of the broadcast signals 
off-the-air which he wants the telephone 
company to transmit over the distribu- 
tion system. No Bell Companies are 
rendering CATV service directly to the 
viewing public nor have they any plans 
to do so. Indeed, the tariff offerings 
available to CATV system operators spe- 
cifically exclude the Bell Companies from 
any dealings with the CATV operator's 

Some independent telephone compa- 
nies are pursuing a very different course 
however, and are themselves becoming 
CATV operators by providing the com- 
plete service from program selection to 
installation and billing of each individual 
patron. Bell System channel service is 
offered only from the CATV operator's 
antenna location to his patrons' premises. 
Connection of individual TV receivers to 
the terminal of Bell-provided channel ser- 
vice is the responsibility of the CATV 

From the Bell System vantage point, 
it is apparent that the CATV industry 
is undergoing rapid and fundamental 
changes: for example, the move into the 
larger city markets from the smaller com- 
munities for which it was originally con- 

ceived; the increasing use of distant TV 
signals which are imported by means of 
microwave, and the intense stniggle for 
franchises in non-CATV communities. 
Proposed regulation by Federal, state, or 
local authorities will impose still further 
changes. In this respect the Federal Com- 
munications Commission, on March 8, 
1966, adopted rules establishing their 
regulatory jurisdiction over certain 
phases of the operation of all CATV sys- 
tems. While designed to insure the con- 
tinued orderly development of all types 
of television broadcasting service, the 
rules concern themselves primarily with 
the viabiUty of UHF — particularly in the 
100 largest population areas of the na- 
tion. In these areas, the newly adopted 
FCC regulations appear to place rather 
limiting restrictions upon the growth of 
CATV until such time as there is more 
conclusive evidence available indicating 
whether CATV will deter the develop- 
ment of UHF in such an area. 

In summarizing the Bell System's posi- 
tion and involvement with respect to 
CATV, it is most important to stress the 
point that the Bell Companies do not 
seek to compete with CATV system oper- 
ators. Rather their objective is to serve 
the CATV operators by providing them 
with the best, most reliable and most ad- 
vanced communications service available 
for the transmission of television signals. 

To better meet this objective, the Bell 
Companies have selected, on either a 
state or regional basis, specific individuals 
to act as CATV industry coordinators. 
Hopefully, through these individuals, a 
closer cooperation and understanding 
will be developed between the Bell Com- 
panies and the CATV industry regarding 
the day-to-day problems that are of mu- 
tual concern to both. 

By this and other means which may 
suggest themselves as CATV continues to 
grow, the Bell System stands ready to 
serve this industry to the best of its abil- 
ity and to provide and maintain the high- 
est quality channel service for CATV 
system operators. 


For Education 

Mankind is amassing knowledge 

so rapidly that two major 

problems have been created. One 

is storing information in the 

most practical form; the other is 

providing a means of rapid 

referral to any desired part of 

the storage bank. Most educators 

agree that the promise for the 

future lies in augmenting 

conventional print by bulk 

storage, random-access devices 

such as magnetic tape and 

computers. Information stored in 

a central "memory file" can be 

retrieved by any student over any 

distance, by telephone or 

teletypewriter. Depending upon 

the nature of the information 

and the form in which he wants it, 

the student of tomorrow may obtain 

it as a voice response from a 

computer, print-out in a teletypewriter, 

slow-scan or regular TV image 

on a cathode ray tube or a 

facsimile reproduction on paper. 

Such techniques as those seen 

here and on the following pages 

can extend the horizons of 

knowledge, making it possible for 

students even in small, remotely 

located schools to have rapid 

access to centrally located 

reference material through the 

facilities of the telephone network. 


(1) Dr. Henry Pollack, chai 
Mathematics Division, Bell Laboratories, uses 
Bell Laboratories-developed telewriting device 
during Tele-Lecture on Contemporary 
Mathematics to augment words with visi- 
ble equations on "remote blackboards" 
for 500 students in ten colleges (2). 
(Left) High school students in Altoona, 
Pa., (3) concentrating in mathematics, 
science and social sciences, learn to 
use the computer as an academic tool. 
Over 1,000 students have access to re- 
motely located computer (4) via 
teletypewriter links from classrooms. 


For Education 

A three-channel closed 
circuit television system 
serves 162 public schools 
with 105,000 pupils through- 
out the State of Delaware. 
Programs originating at a 
fully-equipped studio in Dover 
(5) are relayed over special Bell 
System lines to one central 
school in each district for 
re-transmission to local 
schools. (6) Schedules include 
series ranging from four 
programs of 15 minutes each 
to 30 half-hour programs, 
covering art, science, lan- 
guages, social studies, health 
and physical education. 


At the Carnegie Institute 
of Technology students use tele- 
typewriters in the classroom (7) 
while learning advanced, sophis- 
ticated techniques of time-sharing 
for programing and retrieval of 
computer-stored information. 
They also work at the computer 
itself (8). Communications 
terminal equipment is supplied 
by the telephone company. 


For Education 

An experimental system under test in the Los Angeles Public School System was cre- 
ated especially to meet the needs of children — handicapped or ill — who cannot 
attend school. Special console with automatic dialer "convenes" class by tele- 
phone. As many as 20 children can be included in this school-by-telephone system. 


Tele-Lecture (9) permits the simultaneous 
sharing of outstanding resources in 
the social science disciplines, under 
the Greater Cleveland Social Science 
Program, with other schools and 
school systems, both public and 
non-public, as far away as Michigan 
and Massachusetts. (10) Facilities and 
services of the nationwide telephone 
network enable teachers in primary 
and secondary schools to benefit from the 
Program and to receive college credJt hours. 


For Education 

The use of an integrated data-processing system utilizing telephone facilities to link all scho 
central processing facilities permits the rapid, accurate and automatic collection of data fj 
entire Elementary School District in Tempe, Arizona. Instead of the familiar roll books, t^ 
there report absent pupils by using pre-punched cards that have been individually co( 
each pupil. Each morning the school secretary feeds these cards into a card reader 
automatically sends the pupil's register number, school and grade to the central data pro 


At the University of 
Wisconsin, a program in 
continuing education in 
medicine serves 250 doctors 
in 20 hospitals throughout 
the state. Lecture- 
discussions are heard live by 
participants (11) and are 
simultaneously taped. 
Taping is done at the studio (12) 
with compressed speech 
techniques; this enables 
individual doctors (13) w/ho 
missed a live lecture to hear 
a speeded-up re- play by 
calling the studio. 
Compressed speech speeds 
up enunciation, or syllables- 
per-second, without 
changing pitch or character 
of speaker's voice. 



John A. Hornbeck, 
President, Bellcumm, Inc. 

The author points out 
sible Apollo landing si 
a large scale map of the i. 
Below, left to right, models 
of Saturn 1, Saturn IB and 
the moon rocket, Saturn V. 

WM When Bellcomm first entered our 
nation's manned space flight pro- 
gram, just over four years ago, the 
concept of landing men on the moon and 
returning them safely to earth seemed 
daring at the very least and in some 
ways almost unbelievable. Many skeptics 
doubted that this feat could be accom- 
plished at all. 

Today, after tens of thousands of man- 
years of effort, the prospect of the United 
States accomplishing the Apollo lunar 
landing mission is good — most probably 
it will be done within the next three and 
one-half years. 

Eight of the 12 Gemini flights have 
been concluded. Early next year. Project 
Gemini will be history, along with Proj- 
ect Mercury which sent the first Ameri- 
cans into orbit. 

Already we have seen the first of the 
Apollo/ Saturn flights which will culmi- 
nate in the moon mission itself. In that 
first flight, which took place last Febru- 
ary, an unmanned Apollo spacecraft 
riding a new Saturn IB rocket left the 
earth on a successful suborbital mission. 
Next year we shall see the first Apollo/ 
Saturn IB manned flight as well as the 
first unmarmed launch of the moon 
rocket — Saturn V. 

This 282-foot (365-feet with space- 
craft), three stage rocket, which gener- 
ates 7.5 million pounds of thrust, is 
already in production as is every other 
major piece of equipment that will be 
needed in the expedition to the moon. 
All will be tested in a series of succes- 
sively more complex flights culminating 
in the Apollo lunar landing mission. 

In essence, the aim of the Apollo pro- 
gram is to give man a chance to explore 
the moon. To do this means that the 



Saturn V rocket must hurl a 95,000- 
pound payload to the vicinity of the 
moon. The payload is made up of two 
different spacecraft, the three-man Apollo 
command module and the two-man lunar 
excursion spacecraft, plus a service mod- 
ule. The service module is like a portable 
storehouse which supplies to the com- 
mand module the electric power, potable 
water, oxygen and the rocket propulsion 
needed both to insert the two spacecraft 
into lunar orbit and to get the command 
module with the three astronaut-explorers 
out of lunar orbit and into a safe-return 

After the combined spacecraft and 
service module go into lunar orbit, two 
of the three astronauts will climb into the 
lunar excursion module and descend to 
the moon's surface. After exploration 
there they will re-enter the module and 
fly back into lunar orbit to rendezvous 
with the orbiting Apollo craft. This 
flight plan eliminates the need to expend 
the rocket fuel to lower the entire com- 
mand module and service module to the 
surface of the moon. Also to conserve 

fuel, the landing gear and descent engine 
will be abandoned on the moon's surface 
just as the rest of the excursion module 
will be abandoned in lunar orbit for the 
return journey. 

These elaborate flight plans result from 
the necessity to conserve weight. Addi- 
tional weight requires more fuel, which 
in turn is more weight that the rocket 
engines have to boost. For example, add- 
ing one pound to the structure of the 
Eiscent stage of the lunar excursion vehi- 
cle would require the addition of about 
five pounds of fuel in the two spacecraft. 
Such factors as this have driven the size 
of the booster rocket to the immense pro- 
portions of the Saturn V. 

The Size of the Program 

Not only the rocket, but all aspects 
of this National Aeronautics and Space 
Administration ( NASA ) program are im- 
pressive. The new facilities for manned 
space flight are valued at about $4 bil- 
lion. These include the 52-story Vertical 
Assembly Building at Cape Kennedy, 


Florida. Of this building, the largest in 
the world, it has been said with only 
shght exaggeration that the United Na- 
tions building would slip through its 
doors. It is a part of the John F. Ken- 
nedy Space Center (KSC). Two other 
field centers are the George C. Marshall 
Space Flight Center (MSFC) located at 
Huntsville, Alabama and the Manned 
Spacecraft Center ( MSC ) near Houston, 
Texas. More facilities are located in Mis- 
sissippi, Louisiana, New Mexico and 
California. The 14 principal stations of 
I the Manned Space Flight Network, for 
communications and tracking, stretch 
around the world. 

The magnitude of the program is fur- 
ther illustrated by the size of the govern- 
ment-industry team which has been 
assembled. Besides the 15,000 govern- 
ment people charged with project man- 
agement and procurement there are some 
300,000 industrial people divided among 
12 prime contractors, 17,000 subcontrac- 
tors and uncounted sub-subcontractors 
and vendors. 

Assembling this team and molding it 

into an efficient operating structure, one 
that is directed and controlled, has com- 
prised a monumental management prob- 
lem. The technological feasibility of the 
Apollo mission is no longer in question 
although many technical challenges re- 
main. At this stage, however, it is the 
competence of the technical management, 
and the excellence of their management 
tools, at almost every level in the pro- 
gram on which, in a very real sense, the 
success of the mission depends. 

The management challenge derives 
from the very difficulty of the Apollo mis- 
sion itself. In part this may be illustrated 
by the evolution of the booster design 

At the time the Apollo/Satxun pro- 
gram was undertaken, the experience in 
this country with the development of 
large rockets came exclusively from our 
ballistic missile programs. In the process 
of development of these missiles, scores 
of each were fired in tests before ma- 
turity of design was achieved. 

The philosophy of the Saturn/ Apollo 
program has to be different from the 

Important steps in the Apollo 
lunar landing mission are shown 
here and on the following pages. 
Left to right: The second stage of 
Saturn rocket burns out, and third 
stage ignites; spacecraft achieve 
orbit around earth; docking of 
Lunar Excursion Module takes 
place: Lunar Excursion Module 
ignites, while command module 
continues in moon orbit. 



ballistic missile development philosophy 
for the simple reason that, given the size 
and cost of the tremendously large Sat- 
urn boosters, the nation could not afford 
to build and test scores of them before 
undertaking a manned space flight. We 
were therefore forced to adopt a con- 
cept of few flight tests and the accom- 
panying objective of making each flight 
a successful one. especially so, of course, 
when it is manned. Thus the program 
places extremely severe demands on the 
industrial team. What is required is 
nothing less than the very best reliability 
that the nation's technology is capable of 
producing. NASA is asking this of all 
17,000 prime and subcontractors, no one 
of which can be allowed to fail. In the 
last analysis, the matter of how success- 
ful industry is in this endeavor will de- 
termine when we can achieve the national 
goal of lunar landing. 

Bellcomm's Job 

In describing Bellcomm's place in this 
exciting program the large numbers char- 
acteristic of the program do not apply, 
but the impressive technical challenge 

remains. The smallest full-fledged com- 
pany in the Bell System, Bellcomm has 
about 350 people. Bellcomm has no lab- 
oratories. Its job is systems engineering, 
technical fact finding and consulting in 
technical support of the NASA Office of 
Manned Space Flight (OMSF) and its 
Director, Dr. George E. Mueller, NASA 
associate administrator for Manned 
Space Flight. The bulk of our effort is 
systems engineering for the Apollo Pro- 
gram Director, Maj. Gen. Samuel C. 
Phillips, an Air Force officer on active 
duty with NASA. 

Systems Engineering 

Since systems engineering is a man- 
agement tool used to help define, assess 
and control a major program, our work 
can best be identified and delineated 
within the framework of the Apollo Pro- 
gram management structure. The three 
NASA field centers previously mentioned 
are responsible to the Office of Manned 
Space Flight in Washington, D.C. These 
are MSFC, under Director Wernner von 
Braun, which has responsibility for de- 
velopment and procurement of the Sat- 


Steps in moon land- 
int^ and return: Lu- 
nar Excursion Mod- 
ule descends to 
moon; LEM pre- 
pares for return to 
lunar orbit; LEM, 
comnumd module are 
lined up for dock- 
in.i;; service module 
is discarded, com- 
numd nu>dule pre- 
pares for re-entry. 

urn launch vehicles; MSC, under Di- 
rector Robert Gilruth, which has similar 
responsibility for the spacecraft; and 
KSC under Director Kurt Debus which 
is responsible for final assembly, checkout 
and launch of the total space vehicle. 
Each of these centers has a systems en- 
gineering function associated with its 
part of the program, as indeed does each 
of the prime contractors who are under 
contract to a center for hardware design 
and construction. 

The systems engineering work in which 
Bellcomm is engaged is that associated 
with the level and functions of the 
overall Apollo Program Director. We 
work on a daily basis with the center 
systems engineering people as well as 
with Gen. Phillips and members of his 
staff. Because of this association with 
top program management officials, our 
technical work affects major program de- 
cisions. We, of course, do not make these 
decisions, but we are accountable for 
technical studies and judgments which 
form part of the basis for the decision- 
making. This is a very grave responsi- 
bility. Understandably, there is a high 

premium on our work being technically 
thorough and accurate. 

Bellcomm's systems engineering role is 
to help ensure that the hardware being 
developed, including the space vehicle, 
ground communication and tracking sys- 
tem, and ground support equipment, is 
able to perform the designated Apollo 
tnission and that the mission chosen is 
sufficiently well identified and described 
that everyone involved understands what 
it is. These objectives are achieved in 
part in the Apollo Program by the prep- 
aration and issuance of the following key 
systems engineering documents: 

Apollo Flight Mission Assignments. 
This document designates the objectives, 
flight hardware configuration, flight pro- 
files, payloads and on-board experiments 
on a flight-by-flight basis for each mis- 
sion in the Apollo Program. It is ap- 
proved by the associate administrator of 

Apollo Program Specification. This is 
the top level technical specification and 
as such delineates the performance, de- 
sign and test requirements for the Apollo 
Program. It is an inch-thick summary 



listing every major piece of hardware 
and what it is required to do. The sjjeci- 
fication is approved by the Apollo pro- 
gram director. 

Apollo Mission Sequence Plan. This 
systems engineering working document is 
a step-by-step account of the lunar mis- 
sion identifying what is happening at 
each step during the entire mission period. 

Quarterly Weight and Performance 
Report. This summarizes the weight and 
performance capability of the Apollo/ 
Saturn space vehicles. 

Natural Environment and Physical 
Standards for the Apollo Program. This 
contains the approved set of values for 
the environmental conditions, both terres- 
trial and lunar, applicable to the Apollo 
mission. It also establishes a set of astro- 
dynamic constants and geodetic and sel- 
enographic reference systems. The docu- 
ment is in effect an encyclopedia of defi- 
nitions and numbers which all working 
on Apollo can use. 

Project Apollo Coordinate Systems 
Standards. Here are recorded inertial. 

Remote terminal is used by Beilcomm people 
at NASA Headquarters to "converse" with 
digital computer at Beilcomm Headquarters. 

vehicle, geodetic, guidance and naviga- 
tion coordinate system standards for the 
Apollo Program. It is a very thin, but 
very important manual which sets forth 
uniform standards for the many people 
working on the project. 

The 'Top of a Tree' 

Quite obviously, the information in 
these documents is not generated over- 
night. It is the product of years of efifort 
by the entire program structure, techni- 
cal studies by Beilcomm and other ele- 
ments of the Apollo Program Office, the 
three field centers and their strong array 
of contractors. The majority of the in- 
formation originates in the last two 
groups. The development of this in- 
formation is also an evolutionary process 
in which the ultimate goal is to achieve 
completeness and accuracy. One recog- 
nizes, then, that in most cases these 
documents are simply the top of a series, 
or tree. For example, the Apollo Program 
Specification is enlarged upon in literally 
tens of thousands of specification docu- 
ments in the program. 

Work of the kind that generates use- 
ful systems information often requires 
sophisticated tools. In trying to imder- 
stand how each part of the Apollo mis- 
sion affects the whole, the systems en- 
gineer may be led to consider mission 
parameters that have a significant effect 
on the flight trajectory. Examples of 
these parameters are launch azimuth, 
flight times, lunar stay time and lunar 
landing site location. The mission tra- 
jectory is determined by roughly 20 of 
these major parameters. Problems with 
this many variables are not tractable un- 
less handled with the help of a modern, 
general-purpose digital computer. And 
the computer is useless unless it has a 
program which has been especially de- 
signed to make trajectory calculations for 
the Apollo mission. 

A major contribution to Beilcomm 
effort in this area was made by Bell Tele- 
phone Laboratories. Over a period of 


more than two years the Bell Labora- 
tories constructed a sizable trajectory 
simulation program that would run on 
the Bellcomm computer. This program 
is a vital tool for work on trajectories, 
navigation, guidance and control. 

Contributing Programs 

Another segment of OMSF and Bell- 
comm activity is introduced by describ- 
ing one other document. It is, Require- 
ments for Environmental Data in Sup- 
port of the Apollo Program, which out- 
lines the environmental data needed by 
the Apollo Program from other NASA 
offices. The data are principally in the 
fields of radiation ( solar and Van Allen 
belt ) , meteoroids and lunar surface in- 

Several of NASA's mimanned space 
programs have, in addition to important 
scientific and technological objectives, the 
specific objective of acquiring informa- 
tion needed by the manned lunar pro- 
gram. Most significant among these are 

Ranger, Surveyor, and Lunar Orbiter. 
Ranger, culminating in a spectacularly 
successful series of flights, has provided, 
through television pictures of the moon, 
early photographic samples of lunar sur- 
face roughness and the general character 
of the lunar surface. Surveyor is a space- 
craft intended to land softly on the moon 
just as the USSR succeeded in doing with 
Luna 9. It is designed to provide direct 
measurements of small scale surface 
roughness, slopes and that all-important 
quantity for landing Apollo, surface 
strength. Lunar Orbiter is a spacecraft 
with photographic capability which when 
placed in orbit about the moon can photo- 
graph broad areas with very fine resolu- 
tion and transmit the pictures back to 
earth. The strategy of employment of 
these spacecraft, which Bellcomm helps 
to formulate, is of special significance be- 
cause of their use to survey and select 
good landing sites on the lunar surface 
for the actual manned Apollo mission. 
A much smaller segment of Bellcomm's 

Dennis James of Bellcomm shows lunar lighting effects on relief map derived from Ranger 
photograph to Air Force Major General Samuel C. Phillips, the Apollo Program director. 



work is concerned with advanced plan- 
ning, that is, planning studies for pos- 
sible missions after the first successful 
Apollo mission. This work is in support 
of the OMSF Saturn/ Apollo AppUca- 
tions Office and the Advanced Manned 
Missions Office. The studies include a 
mixture of earth orbital missions, ex- 
tended lunar exploration and even con- 
siderations involved in that extraordi- 
narily difficult venture, marmed landing 
on our neighboring planet. Mars. 

A few final remarks about Bellcomm 
as an organization and as a company 
may be appropriate. Bellcomm is a 
wholly-owned subsidiary, its stock being 
jointly owned in equal amounts by 
A.T.&T. and the Western Electric Com- 

pany. It is a "regular" Bell System i 
Company in the sense that Bellcomm i 
has its own pension fund and the ' 
standard interchange of personnel agree- ! 
ment with A.T.&T. The chairman of it.s j 
board of directors is R. R. Hough, vice i 
president. Engineering, of A.T.&T. Us 
board is comprised of officers of A.T.&T., 
Western Electric, Bell Telephone Lab- 
oratories and Bellcomm, among whom is 
Bellcomm's chief administrative officer, 
R. E. Gradle, vice president and general 

Bellcomm's technical management is 
divided into two areas — Systems Engi- 
neering under T. H. Thompson, and Sys- 
tem Studies under Ian M. Ross. Both of 
these men joined Bellcomm from Bell 

T.I/. I hdiiipson. center, shows iiunm-eaith geometry to I.M. Ross and R.E. Gradle. 
Plastic sheet illustrates orbital plane which will carry space capsule from earth to the moon. 


Telephone Laboratories. The titles of the 
divisions within these areas are illustra- 
tive of Bellcomm's work: Mission Assign- 
ments, System Requirements, System 
Configuration, Space Sciences and Tech- 
nology, Advanced Systems, and Analysis 
land Computing Systems. 

Members of Bellcomm's technical staff 
are highly trained and experienced. 
Their fields of .specialization include 
physics, geology, chemistry, electrical 
and mechanical engineering, mathematics, 
computer programing, psychology, aer- 
onautics, operations research and many 
lothei-s. Of the staff, 27 per cent have 
'the PhD. degree, 48 per cent the Masters 
degree and 25 per cent the Bachelors 
degree. In the last group, none joined 
Bellcomm without some years of prior 
experience in related technical work. 

While Bellcomm is a profit making 
company most of us in Bellcomm feel, 
as do many Bell System people, that we 
are firstly and most importantly perform- 
ing a public service. I am sure that I 
speak for other Bellcomm people, too, 
when I say that our work in connection 

with NASA's historic venture in space 
exploration is not only demanding but 
exciting, and more than usually reward- 
ing in terms of a personal feeling of 

These systems engineering documents are 
essential to success of Apollo Program. 

PnKKiiiiily oj ■ill" and ■■oiil" boxes slmws close uo/A/ni' iclalionship oj ticllcoiuiii, NASA. 


in this issue... 

William S. Brown, Jr. 

Hubert L. Kertz 

■ In authoring "A Decade of New 
Products" starting on page 10, Wil- 
liam S. Brown, Jr. is also reviewing much 
of the substance of his own career for the 
past ten years. He has been involved in 
the introduction of all new products and 
services offered by the Bell System dur- 
ing that time, and presently carries that 
responsibility as product marketing su- 
pervisor in the Marketing Department. 
This is Mr. Brown's second contribution 
to these pages. His article on Educa- 
tional Television appeared in the Sum- 
mer, 1961 issue. 

After receiving his degree in Engineer- 
ing from the University of Mississippi, 
Mr. Brown joined the Bell System, hold- 
ing various management jobs with Long 
Lines in St. Louis, Kansas City, Atlanta 
and New York; with Southern Bell Tele- 
phone Company in Atlanta and then 
with A.T.&T. in New York. 

■■ In writing on "Annoyance Calls," 
( page 24 ) , Hubert L. Kertz draws 
upon some 40 years of varied experience 
in the Bell System. As vice president. 
Operations of A.T.&T.. Mr. Kertz is 
charged with implementing the Com- 
pany's expressed policy that "the Bell 
System will use every available legiti- 
mate means to combat annoyance calling." 
Mr. Kertz joined Pacific Telephone 
and Telegraph Company as a cable 
splicer's helper in 1926. There followed 
other assignments in Plant and Engineer- 
ing until he entered the U. S. Navy in 
1942. After the war he returned to Pa- 
cific Telephone, where he became assist- 
ant vice president of Engineering in 1953 
and vice president. Operating Staff in 
1958. He came to A.T.&T. in 1960 as as- 
sistant vice president in the rate division 
of the Planning Department, and took 
over his present position in June of 1964. 


'■ As vice president, Planning, for 
A.T.&T., Gordon N. Thayer has 
3ver-all responsibiUty for advice and as- 
sistance to the Bell Telephone Compa- 
nies in working with the rapidly-growing 
new field of Community Anteima Televi- 
sion iCATV). His article, "The Bell 
System and CATV," beginning on page 
30, covers some of the same ground as a 
talk he gave last winter before the Fi- 
nancial Seminar of the National Commu- 
nity Antenna Television Association in 
New York. 

Mr. Thayer joined Bell Telephone 
Laboratories as a member of the techni- 
cal staff in June, 1930. He later super- 
vised various technical groups there and 
served as transmission development engi- 
neer, assistant director and director of 
transmission development and vice presi- 
dent before coming to A.T.&T. in 1955. 
Two years later he became vice presi- 
dent. Operations of Ohio Bell Telephone 
Company, then returned to A.T.&T., 
where he was vice president. Marketing 
and vice president, Operations before as- 
suming his present post in the Planning 
• Department in June, 1963. 

■ Dr. John A. Hornbeck, president 
and a member of the board of direc- 
tors of Bellcomm, Inc., since its founding 
in 1962, is eminently qualified to write 
of the new company's purposes and ac- 
tivities ( page 44 ) . 

After receiving the Ph.D. in physics 
from Massachusetts Institute of Technol- 
ogy in 1946, Dr. Hornbeck joined Bell 
Telephone Laboratories in 1946 as a re- 
search physicist in the Physical Elec- 
tronics Department. He later headed 
departments specializing in Semiconduc- 
tor Physics and SoUd State Device 
Development. He was named Director 
of Electron Device Development in 1955 
and assumed the position of executive 
director. Semiconductor Device and Elec- 
tron Tube Division in 1958. 

Among many professional associations. 
Dr. Hornbeck is a Fellow of the Ameri- 
can Physical Society and of the Institute 
of Electrical and Electronics Engineers 
and a member of the American Associa- 
tion for the Advancement of Science. He 
is the author of a number of technical 
articles which have been published in the 
Physical Review and elsewhere. 

Gordon N. Thayer 

Dr. John A. Hornbeck 


W.E. Breaks Record 

Medical Data Sets 

Three New Phones 

TD-3 Microwave 

Telephone Tax Rise 
Plastic Bonding Process 

Caribbean Cables 

— Record-Breaking Year 
For Western Electric 

■■ The year 1965 was a recordbreakir 
one for Western Electric, manufactu 
ing and supply arm of the Bell System, i 
its sen/ice to the Associated Companie: 
With lower price levels, total sales exceede 
$3.3 billion, an 8 per cent increase over 196^ 

W.E. President Paul A. Gorman, in th 
company's annual report, noted that produc 
tion of Western's most familiar product- 
the telephone set — passed nine million fc 
the first time. W.E. more than doubled pre 
duction of the new electronic switching sy; 
tems. Employment increased 11,200 to a 
all-time peak of 168,800. 

Western Electric prices on products of it 
own manufacture sold to the Associatei 
Companies were reduced $33 million annu 
ally. The latest reduction brought Westeri 
prices to a point 16 per cent below the prici 
level at the start of 1950. 

W.E. has also reported savings of mon 
than $49 million on work done under gov 
ernment contracts in 1965. Some 85 pe 
cent of the cost reductions were in connec 
tion with research and development worl 
done on Nike-X projects. Since 1963 whei 
its cost reduction efforts came under ; 
formal cost reduction program inauguratec 
by the Department of Defense for all its con 
tractors. Western has listed savings totalling 
$85.8 million. 

Sales to the Bell System were up 9.5 pe 
cent to $2.8 billion, almost 85 per cent o 
total sales. Sales to the Federal governmen 
amounted to $469 million, down from $49C 
million in 1964. W.E. earned $168.3 million 
or five cents per dollar of sales, comparec 
with $152.8 million (4.9 cents) in 1964. 

The most radical change in W.E.'s manu 
facturing operations during 1965, as for some 
years past, sprang from the Bell System's 
commitment to electronic switching. Produc 
tion of equipment for electronic central offi 
ces continued to climb. 

Nearly a million Touch-Tone® telephones 
and more than 400,000 of the new Trim 
lineCit; telephones were among the 9,176.00C 
sets manufactured during the year. Produc 


New Trimline lelephone sets poured off Western Electric assembly liites during 1965 as 
telephone production crossed the nine million mark for the first time in W.E.'s history. 

tion of a limited quantity of special equip- 
ment for an industrial trial of PICTURE- 
PHONE "see-while-you-talk" service was also 

Western Electric bought goods and serv- 
\ce% from more than 400,000 other busi- 
nesses in 1965, with these purchases 
amounting to $1.4 billion — a total surpass- 
ing any previous year. Ninety per cent of 
these suppliers were small businesses. 

Medical Data Transmission 

]■ The idea of a doctor entering his pa- 
tient's home and within moments send- 
ing the patient's electronic characteristics to 
a central point for expert analysis may 
sound like science fiction, but it is now a 
reality. Three new DATA-PHONE data sets 
have been developed to permit medical per- 
sonnel to send electrocardiographic signals 
and similar data over the public telephone 

Two data transmitters are available: the 
603A, which has a built-in telephone and 
connects electrically to the telephone line, 
and the 603D, which connects acoustically 
to almost any telephone handset when port- 
ability is necessary. The data receiver, the 
603B, is electrically connected to the tele- 
phone line and is used with either transmit- 

ter. At the present time, there are no plans 
for an acoustically coupled data receiver. 

Versions of these sets were on trial for 
some time in widely separted areas of the 
United States and Canada. The success of 
these trials and favorable reaction from doc- 
tors foretell a bright future for medical data 

Three New Phones 

H The growing array of Bell System tele- 
phones will soon have three new addi- 
tions. Recently put into production at West- 
ern Electric's Indianapolis works are the 
newly-designed Hospital Set, the Automatic 
Reporting Telephone (ART) and the Call-a- 
MaticCKj automatic dialing telephone. 

The Hospital Set, which has a Trimline® 
dial-in-handset phone and a base that re- 
sembles a transistor radio, will become part 
of a new communications system for hospi- 
tals, offering patients a convenient method 
of communication inside and outside the 
hospital. Instead of the usual buzzer system 
for paging nurses, the Hospital Set enables 
the patient, hands-free, not only to signal 
the nurse but also to speak with her. With 
the set, the patient no longer has to wait 
until the nurse sees his signal and walks 
to the room. The patient's set also provides 


Patients can have hands-free communication 
to nurses' station with new Hospital Set. 

telephone service to outside phones through 
the hospital switchboard. At the nurses's sta- 
tion, a small console provides terminations 
for lines to the patient's Instrument and 
to the hospital PBX. 

The Automatic Reporting Telephone is de- 
signed for use at unattended industrial lo- 
cations to warn of abnormal or dangerous 
conditions, such as power failures or chang- 
ing pressures in tanks filled with explosive 
gas. When the phone is triggered, it rings 
a preset local or long distance number. If 
no one answers within one minute, the ART 
will disconnect and then try again In 30 sec- 
onds. It will keep trying for a total of nine 
times In a 20-mlnute period. When someone 
does answer, a pre-recorded warning mes- 
sage is played. 

The Call-a-Matic telephone combines Touch- 
Tone® dialing with an automatic telephone 
directory storing up to 500 frequently called 
numbers. The numbers are recorded on mag- 
netic tape by simply lifting a "record" but- 
ton on the set and then dialing the number. 
To place a call, the user turns an indexing 
wheel to the desired letter of the alphabet 
and a motorized scanner surveys the entire 
list of names within seven seconds, stopping 
at the proper letter. The caller then uses a 
manual wheel to center the name in the 

calling space and pushes a •'call" button to 
automatically dial the number. No accesso- 
ries such as cards or a separate dial for 
number recording are needed since the Call- 
a-Matlc set houses all its features in a single 
unit. And, in addition to Its capacious mem- 
ory, the Calla-Matic telephone features six 
buttons for additional lines and holding, as 
well as optional speakerphone service. 


TD-3 I 

H TD-3 Microwave, the latest Bell Sys- 
tem microwave transmission system, 
Is being manufactured by Western Electric 
for field trial this spring. The new system 
will double the message capacity of the 
present TD-2 Microwave — currently the 
backbone of the Bell System's long distance 
microwave communications. Employing tran- 
sistors and other solid state devices, TD-3 
will supplement, and In some cases replace, 
the older system throughout the United 
States. Each TD-3 system will provide ten 
working channels and two protection chan- 
nels In both directions, with each broad- 
band channel capable of transmitting 1,200 
simultaneous telephone conversations — as 

Tower frames are placed on roof of station 
building for TD-3 microwave system trial. 


against 600 on TD-2 — or a combination of 
phone calls, data and intercity television. 

TD-2 has effectively handled this job 
since its introduction in 1949 and its pres- 
ent production is at an all time high. But 
with the unprecedented growth in traffic in 
the intervening years, the saturation point 
on available frequency band transmission 
space was fast approaching. Bell Labora- 
tories engineers worked with Western Electric 
and A.T.&T. Long Lines people to develop 
the new larger capacity system. 

TD-3's trial towers will rest on station 
buildings housing the power, amplifying and 
testing apparatus. This new roof-mounted 
construction will shorten and straighten the 
wave guides which conduct the microwave 
signals from the station transmitter to the 
antennas at the top of the towers. 

Five watts of power — less than the 
amount needed by a typical Christmas tree 
bulb — is sufficient to send microwave signals 
on their way between stations. And the 
power consideration is of prime importance 
in a solid-state system. One 24-volt power 
supply is needed to operate TD-3's trans- 
mission equipment. At this low voltage, re- 
sistors and capacitors tend to last indef- 
initely. This helps lower maintenance costs 
and guarantees greater reliability — thus 
helping to keep costs of long distance com- 
munications services low. 

For further reliability, sections of the two 
protection, or backup, channels in each 
TD-3 system can be automatically substi- 
tuted for sections of any working channel 
that become disabled. This changeover Is 
made in millionths of a second. 

Telephone Tax Increase 

■ Starting April 1, telephone bills began 
to reflect an increase in the Federal 
excise tax on local and long distance tele- 
phone and teletypewriter services. The in- 
crease is a result of the Tax Adjustment Act 
of 1966, enacted to help meet the country's 
need for additional revenues during the Viet 
Nam emergency. 

Since last January 1, most telephone cus- 
tomers have been paying a tax of three per 
cent, under provisions of a general excise 
tax reduction instituted by Congress last 
year. The new law reinstates the telephone 
tax at ten per cent until April 1, 1968, when 
it will be reduced to one per cent, and then 
eliminates it at the close of that year. 

New Process 

For Bonding Plastics 

■■ The Bell System is a large user of 
plastics of all kinds, and research in 
this field is constantly being done by Bell 
Telephone Laboratories. A new process for 
treating certain plastics so they can be 
joined strongly to other materials by ad- 
hesives has been invented at Bell Labora- 
tories. The process also gives new insight 
into how materials stick together. 

Many thermoplastics, including materials 
such as Teflon and polyethylene, can be 
treated by this new process. These plastics 
cannot be bonded strongly to other ma- 
terials by adhesives unless their surfaces 
are treated. Previously, surface treatments 
changed certain characteristics of the plastics, 
including such things as tensile strength, 
color, and dielectric properties. The new 

Bell Labs scientists prepare a test of new 
process they invented for bonding plastics. 


process, however, does not alter the desirable 
chemical or physical properties of the 

This process also makes it possible to 
print successfully on Teflon and polyethy- 
lene. Until now, Teflon could not be printed 
on successfully because its surface became 
badly discolored after exposure to surface 
treatment, thus obscuring the printing. 
(Printing is a form of adhering. Ink is the ad- 
hesive which "sticks" to the plastic.) 

Two Bell Laboratories scientists found 
that by exposing a sample of thermoplastic 
to an electrically-activated inert gas, such as 
helium or neon, a tough outer "skin" forms 
on the surface of the plastic. (This is some- 
what like the skin that forms on paint when 
it is exposed to air.) This layer of tough skin 
makes an ideal surface for adhesive bond- 
ing. The result is an adhesive joint ten or 
more times stronger than possible with an 
untreated sample of the same plastic. 

Until now, many scientists believed that 
weak adhesive joints were due primarily to 
weak interfacial forces between the thermo- 
plastics and other materials. The Bell Labs 
scientists have concluded that weak joints 
result primarily from a layer of weak ma- 
terial at the surface of these thermoplastics. 
The two scientists now say that two condi- 
tions — complete interfacial contact and 
strengthening of the weak boundary layer 
material — are necessary to achieve maximum 
adhesive joint strength. 

Caribbean Cables 

H A.T.&T. has asked the Federal Com- 
munications Commission for permis- 
sion to construct a telephone cable between 
northeastern Florida, near Jacksonville, and 
St. Thomas, in the Virgin Islands, to meet 
the growing communications needs between 
the continental U.S. and Puerto Rico, the 
Virgin Islands and other points in the east- 
ern Caribbean. Designed by Bell Laborato- 
ries, the single cable would be equipped 
with rigid two-way transistorized amplifiers 
and capable of handling 720 simultaneous 
conversations. Until now, the maximum ca- 

pacity of submarine cables has been 138 
conversations. A.T.&T.'s Long Lines Depart- 
ment would lay the cable, which will cost 

Work has been started abroad on an 80- 
voice overseas telephone cable to be placed 
between St. Thomas and Maiquetia, Vene- 
zuela, near Caracas. It is expected that the 
HMTS Alert will begin laying the cable, which 
is of British design, during the last week 
in June. When placed in service early in 
August, it will provide the first physical com- 
munications link between North and South 

The cable ship Mercury finished laying the 
new British Commonwealth cable between 
Bermuda and Tortola, British Virgin Islands, 
in late March. A May service date is ex- 
pected. This cable, which has a capacity of 
80 channels, will be linked to St. Thomas by 
means of radio relay facilities. St. Thomas 
is also linked to San Juan, Puerto Rico; thus, 
with the opening of the cable to Venezuela, 
it will become an important hub of Caribbean 
and South American communications. 

Ultra-Clean Room 

^ A room as clean as any place on 

earth had to be created by Western 

Electric for the production of the latest mini- 

Doors permit devices lo pass to work areas 
in ultra-clean room without contamination. 


ature electronic wonders, including entire 
electrical circuits no larger than the head of 
a pin. The ultra-clean room is in Western's 
Allentown, Pa. plant, where tiny chips of 
;ilicon are transformed into microscopic 
anits containing dozens of transistors and 
other solid-state devices. This Photo Resist 
:Room — named for one of the photographic 
iprocesses in making the miniature devices — 
;is 1,000 times cleaner than most conven- 
itional clean rooms. 

The "super interception" filter that makes 
the room super clean was developed for the 
Atomic Energy Commission and adapted for 
industrial and medical uses by scientists who 
specialize in contamination control at the 
Sandia Corporation, a Western Electric sub- 
sidiary. The filter, fashioned chiefly of asbes- 
tos and fiber glass, intercepts at least 99.97 
per cent of all particles larger than 12 mil- 
lionthsof an inch in diameter — which includes 
most bacteria. 

In addition the air in the room must be 
changed often to remove particles that are 
generated within any room — people, paper 
and even pencils emit particles continuously. 
Filtered air sweeps through the entire room 
in a uniform flow, straight down from ceiling 
to floor, carrying particles out of the room. 
The air is replaced completely at least once 
every ten seconds. 

Each work position in the room also has 
its own filter and air-flow arrangement. These 
filters plus even faster air changes make the 
work areas some ten times cleaner than the 
main part of the room. The table-top work 
areas are almost completely enclosed and 
arranged so that the electronic devices can 
be passed from one position to the next 
without taking them into the room. 

The chemical solvents used in the room 
are also super-clean; filters keep out every- 
thing larger than a 1,000th of an inch. And 
every night the room itself is swabbed from 
top to bottom with special cleansing agents. 

Such stringent controls are a necessity. 
In fashioning a tiny electrical circuit, two 
electrical paths may be only a 500th of an 
inch apart. A dust particle that size drift- 
ing out of the air and landing between the 
paths would cause a short circuit. 

Even moisture is controlled. Humidity is 
kept below ten per cent — fifteen per cent 
below that found in the central Sahara. 

Restoration Control 

^ When natural or man-made disaster 
strikes — hurricane, flood or even 
sabotage — A.T.&T.'s Long Lines Department 
goes into action immediately to reroute 
communications to protection paths, chan- 
nels kept free for emergencies. Sometimes 
rerouting around a trouble spot involves 
setting up channels hundreds of miles away. 
Until recently, the time required to con- 
tact other offices and establish new routes 
has averaged 25 minutes or more. But this 
is expected to drop to less than ten minutes 
when the first Bell System semi-automatic 
Restoration Control Office is completed this 
spring. The Wayne (Pa.) Restoration Control 
will be the first of eight "master" offices to 
be established in the United States to help 
survey and coordinate restoration through 

/;; first Resloration Control Office lights 
trace outline of simulated circuit failure. 


subordinate offices in their territories. 

Long Lines restoration men previously 
have had no way to determine Instantly 
where a failure occured or what protection 
paths on other facilities were free for use. 
They needed a fast, fail-proof way of reach- 
ing at once all the telephone offices involved 
in rerouting. Now, with the new Western 
Electric-built equipment at Wayne, Long 
Lines technicians will be instantly alerted to 
a failure by both a bell and lighted wall 

One map display shows all the telephone 
offices through which the restoration center 
would coordinate operations in its territory. 
A second display identifies the channel that 
failed and lists the prearranged restoration 
plans. (The Wayne Restoration Control Office 
has more than 700 restoration plans, in- 
volving 19 subordinate offices, in a territory 
than includes parts of four states.) All in- 

formation shown in the lighted displays is 
provided by a new Western Electric telemetry 
system that not only scans all communica- 
tions channels in the territory continuously, 
but also allows the Restoration Control Office 
to activate the reroute switches in distant, 
unattended offices. 

Flood Forecasting System 

m The U.S. Weather Bureau has started 
tests of a new electronic detection 
system that may provide warning of flash 
floods to hundreds of river towns. The pilot 
project, called AHOS (Automatic Hydrologic 
Observation System), employs 20 remote 
stations in the Potomac River Valley. From 
four states, AHOS's sensing equipment trans- 
mits river and rainfall data continuously to 
Washington, D.C., furnishing Weather Bureau 

At Washington National Airport, left, data is relayed from I) c\iciii i , . ; . ., •.r^in-cl ccjiiip- 
inent to meteorologist at map in Weather Bureau Control room. Information comes from 20 
automatic reporting stations where recording devices, such as precipitation-sensing device 
being connected to system al ri^ht. provide constant data on possible flood conditions. 


.hydrologists with the vital up-tothe-mlnute 
information they need for flood forecasting. 
The whole process requires a fraction of 
the time it takes if the data is read from 
gauges by Weather Bureau observers, who 
often are farmers, housewives and merchants 
in flood-prone areas. Frequently they must 
hike several miles just to reach the semi- 
isolated measuring locations. Round-the-clock 
surveillance, which AHOS makes possible, 
maximizes the hydrologist's opportunity for 
early flood detection, a significant step toward 
eliminating the surprise element from floods. 
Equipment for AHOS was designed and 
much of it manufactured by Western Electric 
to Weather Bureau specifications. A.T.&T.'s 
Long Lines Department is leasing the service 
to the Government. 

A data "concentrator" and special tele- 
typewriter housed in the Weather Bureau's 
office at Washington National Airport, plus 
the 20 measuring and transmitting stations, 
are the system's basic equipment. Electronic 
weather investigation begins at each remote 
station, where encoders are continually 
gathering data from two weather-sensing 
devices, which observe precipitation and river 
levels. This information is converted by the 
encoder into signals that can be used by the 

Signals are transmitted from the observa- 
tion stations over Bell System and indepen- 
dent telephone company leased lines to the 

j concentrator at Washington National Airport. 

I Different frequencies are used by the various 

, reporting stations so that the concentrator 
can accept the signals simultaneously, thus 
requiring fewer phone lines. 

I Equipped with a memory unit similar to 
the one used in Bell System electronic 
switching systems, the AHOS concentrator 
stores and updates the data, which is printed 
by the teletypewriter automatically, or when- 
ever the hydrologist wants it. It takes two 
minutes for 20 stations to report. 

When the information flashing into Wash- 
ington National Airport indicates a poten- 
tially dangerous condition, warnings are tele- 
phoned to key agencies In areas likely to 
be flooded. Within minutes, alerts go to 
police, radio and television stations, radio 

hams, utilities and news services, giving com- 
munities along the course of the river time 
to protect lives and property. 

Data Communications Text 

H A new Bell System textbook. Data 
Communications In Business: An In- 
troduction, has just been printed and is being 
mailed directly by the Associated Companies 
to about 19,000 educators and school libra- 
ries. Written by the Data Communications 
Planning section of the Marketing Depart- 
ment, the book is designed as a college-level 
text for use in business courses in the field 
of information handling and processing. 

The book presents in non-technical lan- 
guage the fundamental ideas involved in 
developing effective uses of data communi- 
cations. It provides insight into the ways in 
which business and industry may benefit 
from merging data processing and data com- 
munications techniques. 

Editing by Computer 

■| In a demonstration of a new com- 
puter application that makes compu- 
terized copy-editing far more than a gleam 
in a dreamer's eye, a Bell Laboratories 
scientist recently received a fully-justified, 
perfectly spaced and paragraphed copy of 
a technical manuscript from a computer. 

His secretary had typed the article, from 
a rough, hand-written manuscript, on a data 
terminal which transmitted the information, 
in the form of electrical impulses, to a multi- 
ple-access computer (Project MAC) located 
at the Massachusetts Institute of Technology. 
The data terminal was hooked up to the 
MIT computer via a DATA-PHONE data set. 
Upon completion of the typing, she "asked" 
the computer for a copy of the article and 
received 33 pages of neatly paragraphed, 
spaced and fully-justified copy. 

Additions, deletions and corrections were 
then made by the author. His secretary 
recorded these changes, using special edit- 


ing language programed into the computer, 
and asked for and received a fully-corrected 
and adjusted copy. 

This exercise in computerized copy flow 
could also have been accomplished using 
Bell Laboratories' Graphic I Console instead 
of the MIT Project MAC. But the Bell Labo 
ratories computer does not have the capa- 
bility of recording copy in upper and lower 
case letters yet — only capital letters are re- 
produced. However, the Graphic I Console 
does have an important additional feature 
in entering and editing copy because its cath- 
ode ray tube allows the typist to view the 
script while making and editing corrections. 
Inputs and corrections are made directly on 
the cathode ray tube with a light-pen. 

An interesting historical footnote to this 
exercise: it was over twenty-five years ago 
that George R. Stibitz of Bell Laboratories 
first demonstrated the remote control of a 
program-controlled computer — the harbinger 
of today's highly sophisticated time-sharing 
computer systems. On September 9, 1940, 
he sat down at a teletypewriter in Hanover, 
N.H., and — connected via a two-way tele- 
graph circuit to a specially-constructed elec- 
trical calculating machine at Bell Labs in 
New York City — began transmitting problems 
to the machine 200 miles away. He im- 
mediately received typewritten answers. This 
historical demonstration was made possible 
by Stibitz's successful design of the first pro- 
gram-controlled computer two years earlier. 

Biomechanics Study 

H Assembly line workers find that sore- 
ness of hands, wrists and forearms is 
reduced when pliers are redesigned. A ma- 
chine operator's back pains and muscle sore- 
ness are relieved by a padded posture chair 
and a newly designed bench, which she can 
raise or lower to the best height. A bench 
worker, who is very susceptible to forearm 
bruises and swelling, finds they occur less 
often when padded arm rests are installed 
on the edge of her work position. Operators 
who use microscopes discover neck and up- 
per back stress is relieved when the instru- 

ment's eyepieces are relocated and a custon 
chair is used. Eye strain caused by glare ot 
the work area is reduced when filters are 
installed on bench lamps. 

These are but a few of the case historie: 
which have resulted from a year-long Westerr 
Electric study of biomechanics — the science 
which deals with the man-machine relation 
ship. It involves taking a new look at th 
physical capabilities and limitations of th 
human being on the other end of the too 
or machine. 

The study arose from complaints of plan 
workers about increasing muscular soreness 
and excessive fatigue, which often led tc 
medical restrictions. A preliminary investiga 
tion disclosed that the ailments reported 
were not imaginary and that they affectei 
the over-all operation of a plant because of 
deterioration in the individual's work per 
formance. The company-wide program was 
then authorized. 

Pliers, for instance, were one of the first 
tools to undergo scrutiny. Used thousands 
of times a day for intricate wiring operations, 
they were found to be totally inadequate 
when used by women for constant twisting 
action because of the smaller female hand 
Swelling, restricted finger movement and 
acute soreness were some of the medical 
problems traced to use of the pliers. After 
studying these wiring operations, biomechan 
ics engineers added a spring and plastic 
grips to the pliers, changed the shape of the 
handles, decreased the dimensions and 
added a flange as a thumb stop. 

As part of the Western Electric program, 
similar changes and other new equipment 
have been designed to improve the machine- 
operator relationship, including screwdrivers, 
soldering irons, chairs, arm, back and foot 
rests. On a broader scale, entire work areas, 
taking into account space, positioning and 
lighting, are also being given careful study. 
Already W.E.'s work on biomechanics prom- 
ises rewards beyond better conditions for 
the workers and improved performance for 
the plant: the attention to the individual's 
needs may also contribute to his personal 
sense of craftsmanship in the job — and his 
feeling of mastery of his machine. 


Western Electric biomechanics engineer studies bent ivrist position caused by shape of 
conventional pliers. Contour handles and thumb stop of redesigned tool reduced strain. 

A new era opens in educational communications 

This year dormitory rooms at hundreds of 
colleges will have their own telephones. 

What's happening? A new era in college 
dormitory life? Yes indeed. Colleges are in- 
stalling room phones to help today's serious 
student use his time more prudently .. .to 
talk with family, friends and others without 
standing in line at a public phone. 

Colleges — and other institutions of learn- 
ing, too-are facing up to the twin explosions 
of population and information by looking 
more and more to communications. On many 
campuses, for example, the student will use 
his phone to "attend" language labs and to 

retrieve other information recorded on tape. 
More students than ever before will be able 
to share lab facilities. 

Soon the telephone will be used to get in- 
formation from computers or set up problems 
for solution. Some colleges and high schools 
are already using teletypewriters for com- 
puter-assisted instruction. 

Communications that make the fullest use 
of our educational resources are under con- 
tinuing development by us. They are another 
way that we serve America's communications 
needs with imagination and economy... 
providing service of all kinds at low cost. 

'SN Bell System 

American Telephone & Telegraph 
and Associated Companies 


u s. pod 




Librarian. Periodical Dept. 
Kansas City Public Library, 
Kansas City, Mo., 6. 

o^ :„ II Q a 




■J.J ,;j^j^^ i.iM.^^"^ ' 

SUMMER 1966 

ciPK^ T "^^ f ^Profit -t Profit -^r /£>//! 

^^^'^'%rAL ImfN) (TOLL) (L 




-^i^ V 

i- r: 

Peering through a iiuigiufyhii; glass, a girl at Western Electrics Indianapolis 
Works inspects a newly numiifactured Triinline'?' telephone for possible 
defects. The complete inspection process, which includes many inspection sta- 
tions such as this one, insures the extremely high reliability of telephone station 
equipment before the equipment is delivered to Bell Telephone Companies. 
Last year Western's Indicmapolis Works manufactured over 9.000.000 new 
telephone sets, of which more than 400,000 were the stylish new Trimlines®. 


2 Managing the Information Revolution 
H. I. Romnes 

16 SAM 

C. K. Collins 

22 Analytical Support Center 

32 ISC 

George B. Turrell, Jr. 


Donald R. Woodford 

Managing Editor 

Leslie D. Simon 

Assistant Editor 

Alix L. L. Ritchie 

Associate Editor 

Salvatore J. Taibbi 

Art Editor 

Charles E. Wample 

Published for the 

Bell System by the Public 

Relations Department, 

American Telephone and 

Telegraph Company, 

195 Broadway, 

New York, N. Y. 10007 

Area Code 212 


36 Chronology: FCC Docket No. 16258 

48 Taking the "Whether" Out of WEATHER 

56 CCITT Conference 

58 In The News 

This magazine is published to present significant 
developments in communications and to interpret Bell 
System objectives, policies and programs for the 
management of the Bell System and for leaders of 
business, education and government. 

"Collage," by Bernard D'Andrea, takes as its 
inspiration some of the pencilled thoughts 
found on scratch pads in the Analytical Sup- 
port Center, subject of an article on page 22- 

The following is the text of the keynote speech 
delivered by Mr. Romnes before the Internationa 
Data Conference, Chicago, Illinois, June 22, 1966 

Managing the 



H. I. Romnes, President, A.T.&T. Co. 

■ To HAVE been chosen as the keynote speaker foi 
this Fifteenth Annual Data Processing Confer 
ence is a very great honor and I am grateful for it 
But it is a formidable assignment on a number ol 

First of all, I don't suppose that anywhere, ever 
has there been gathered under one roof so many rep- 
resentatives of this new profession of yours -informa- 
tion management. Certainly I cannot hope to match 
your expertise or contribute substantially to it. How- 
ever, I can perhaps provide some insights as to what 
business management expects of you- not only its 
hopes as to what you can do for business, but its 
apprehensions as to what you might do lo it. 

My assignment is formidable on another count. 
I hesitate to contemplate the number of keynote 
speeches in the last ten years or so that have been 
addressed to conferences on one aspect or another 

of the so-called "information revolution." Thus each 
succeeding speaker is confronted with mounting odds 
against his being able to discern new trends or rouse 
his audience to confront new challenges. Sooner or 
later program chairmen are going to have to cope 
with the law of diminishing returns. 

Perhaps the computer can supply the answer. Com- 
puters have been programed to write sonnets and 
compose sonatas — and surely the keynote speech is 
an art form that should not be beyond its capabiUties. 
But the computer would probably make its greatest 
contribution if it could take over the listening function 
as well. 

I take some comfort, however, in the thought that 
there may be something new in your choice of a key- 
note speaker — in your having sought him, not from 
your own industry, but from the neighboring realm 
of communications. 



". . . our whole concept 
of what constitutes a 
telephone call has 
radically changed." 

(OMMUNiCATiONS and computation — my busi-i 
ness and yours — have much in common. I 

The telephone system is itself a computer. Its com-fl 
ponents are dispersed across the continent but they 
work as one. Equipped with more than 90 million 
input-output stations, this enormous computer can 
be commanded to provide any one of the three mil- 
hon billion "answers" it takes to connect any one of 
its stations — telephones — with any other and do it 
in a matter of seconds. It is a "real time" operation 
by definition and design. 

It should not be surprising, then, that our tech- 
nologies should have much in common. Indeed our 
newest electronic switching systems, like your com- 
puters, are internally programed and are endowed 
with the same kind of quasi-human memory that youi 
ascribe to your machines. 

And your industry and ours have been mutually 
stimulating — yours deriving perhaps its greatest im- 
petus from the invention of the transistor in our Lab- 
oratories and ours challenged to develop a new order 
of communications capability to meet the needs your 
industry has generated. 

As a consequence of these new needs, our whole 
concept of what constitutes a telephone call has radi- 
cally changed. Today, a telephone connection can 
carry a stream of data — or an engineering drawing — 
or a TV program — or the copy for a newspaper column 
— or it might even carry human speech. In short, it can 
be set up to transmit information in almost any form, 
oral or graphic, transitory or permanent. 

In the short life span of this Association, we have 
introduced many new developments and services to 
match the new needs it represents. New higher-speed 
teletypewriter services are now widely used in moving 
data at speeds up to a 100 or 150 words a minute. 
At the other end of the scale, Telpak provides broad- 
band channels which can be used for transmission at 
speeds up to 500,000 bits per second — on a point-to- 
point basis. Data-phone sets translate the language of 

". . . we . . . are taking 
i as a clear and present 
1 challenge what only 
I a few years ago 
! seemed a fantastic 21st 
i century speculation . . ." 

" . . . while data 
processing and 
data transmission are 
separate undertak- 
ings, each must 
take increasing 
account of the 
other . . ." 

your machines into the language of ours, permitting 
data transmission wherever telephone lines run. And 
our new Touch-Tone® telephone, in the areas where 
this service is available, can not only connect you to 
a remote computer but register information in it as 

Your needs also continue to point new directions 
for our research and development. For example, we 
are working on a digital transmission system, which 
will provide precise and unerring regeneration of data 
signals at frequent intervals over long hauls. The ca- 
pacities we contemplate range from 500 to 1000 mega- 
bits a second in our initial undertakings to the 15,000 
megabits or so we think may eventually be needed. 

In short, we in our business are taking as a clear 
and present challenge what only a few years ago 
seemed a fantastic 21st century speculation — the need 
to bring our switched network to the order of capa- 
bility that will be required to give business and govern- 
ment, and the public at large, instant access to com- 
puter-stored information as conveniently as we tele- 
phone today. 

Let me say in passing, that allied as our businesses 
may be, we are not in the data processing business and 
don't intend to be. We conceive it to be oiu- job to 
be ready to provide the facilities for you and your 
machines to "say" whatever you want to say to each 
other, whenever and in whatever form you want to 
say it — and to provide the interface between your ma- 
chine and ours that will make that possible. Ours is 
a common carrier communications undertaking and — 
from the prospects ahead of us — we shall have quite 
enough to do meeting our own responsibilities with- 
out getting into yours. 

But the principal reason I am here, I suspect, is 
your recognition that, while data processing and data 
transmission are separate undertakings, each must take 
increasing account of the other if the full potentialities 
of both are to be fulfilled. The "information revolu- 
tion," if such it be, signifies not only our new-found 


capacities to generate, store and retrieve information 
but our growing ability to deliver it instantly where 
we please. 

Today thousands of companies, large and small, 
are working to apply these twin potentialities to the 
improvement of their own operations. And so are we 
in the Bell System. If I have anything to contribute 
to your discussions of information management, it de- 
rives, not so much from our special competence in 
commvmications, but from our experience in working 
toward applying electronic information technology to 
our own job. 

You will readily recognize, I think, that our end- 
product — nationwide communications service — depends 
on the activities of thousands of people all across the 
country — in factories, in warehouses and in operating 
units. Thus our stake in a system that will provide 
accurate and up-to-the-minute information to coordi- 
nate this process is very high indeed. While our final 
system is far from complete, I'd like to share with 
you some of the convictions we have developed in 

". . . the information the process of designing it. 

revolution must be managed." 


HE FIRST of these convictions is this: the 
information revolution must be managed. 

Now before you dismiss that statement as the plati- 
tude of the month, I would ask you to think of the 
number of earnest but misconceived computer appli- 
cations there were during the initial surge of enthusi- 
asm for this powerful new business tool. 

We are in a more sophisticated era now. We have 
learned from our mistakes. We have learned that the 
computer is not just another piece of hardware, a 
bigger and better desk top calculating machine. We 
have learned that its price tag is only the beginning 
of the full costs of applying it. And we have learned 
that a computer, however apt it may be — technically — 
for the application for which it was intended, just 
simply won't pay oflf if people won't accept it. 

And what is true for the computer is doubly true 

". . . we must apply to 
its development the 
same lough-minded 
standards of cost 
effectiveness, the same 
oatient and comprehensive 
ylanning that we apply 
o the more traditional 
ispects of our operations." 

for a comprehensive business information system. 
Technical matters are but a part — and probably the 
small part — of the considerations that need to be 
taken into account in the design of a business infor- 
mation system. Designing such a system calls for a 
fundamental thinking-through of organization struc- 
ture and of lines of communication, formal and in- 
formal. And it calls for a careful appraisal of the 
potential human consequences, the effect of the system 
on the decision making power of managers and the job 
satisfactions of employees. 

For good results, a business information system 
can't "just happen." For all its glamor and novelty, 
we must apply to its development the same tough- 
minded standards of cost effectiveness, the same 
patient and comprehensive planning that we apply to 
the more traditional aspects of our operations. 

In this connection, I can't help but wonder whether 
we do ourselves a disservice by our readiness to de- 
scribe the change brought on by the computer and its 
associated mathematical techniques as a "revolution." 
Certainly, I am not ready to deny that the changes 
in business — and in society — that they portend war- 
rant the use of the word. But we don't help matters 
much if its use conjures up a picture of an irresistible 
force with which mere mortals are powerless to cope. 

We have had revolutions before — for example, the 
Bell System's conversion from operator switching to 
dial controlled switching. We managed to direct its 
introduction rationally, himianly. 

We must do the same for this new revolution. For 
this revolution, like most others, holds equal promise 
of liberation on the one hand or, on the other, the 
imposition of a worse tyranny than the one it is de- 
signed to supplant. Computerized business information 
systems can extend and enhance human capabilities, 
providing new scope for initiative and imagination. 
Insensitively applied, however, they can depersonalize 
our undertakings, subordinating the organization and 
its people to the rigid requirements of an inflexible 


". . . it is not only punched 
cards but people that 
shouldn't be folded, 
spindled or mutilated." 

"... a business information 
system, if it is to be 
successful cannot be 
imposed — appliqued — on 
an organization." 

system. (As I have more than once reminded tele 
phone managers — it is not only punched cards bu 
people that shouldn't be folded, spindled or muti 
lated.) Instead of facilitating change, such a syster 
can become a barrier to progress. It can become, no 
a means, but an end in itself. 

Which results we get will depend, not so much oi 
our technical competence in linking computers am 
cormnunications, but on the range and depth of th 
management judgment we bring to the job. 

1 HIS MEANS to me that the responsibility fo 
managing the information revolution cannot be dele 
gated. Designing a business information system isn' 
the exclusive province of a specialized department. Ii 
the final analysis it is a general management respon 
sibility. And it needs to be a concerted undertaking 
reflecting a balanced consideration of the needs of th( 
entire organization. 

Letting the plarming job go by default, fragmentinj 
the responsibility in various little islands of develop 
ment, leads only to waste, duplication of effort and— 
eventually — to frustration. 

But the principal hazard in leaving the planning jol 
to the disparate enthusiasms of this department o: ( 
that, lies in the barriers to compatibility that inevit 
ably arise to confound subsequent efforts to develop ai 
integrated system. If there is one lesson that the ex 
perience of building and operating a nationwide tele 
phone network qualifies us to pass on to the informa 
tion industry, it is the paramount importance of com 
patibility. Where this consideration has been neglected 
where planning has lacked direction from a "system' 
point of view, you can count on it that costly re 
engineering and re-arrangement will follow. 

For a business information system, if it is to be 
successful cannot be imposed — appliqued — on an or 
ganization. Indeed, were you to attempt to do so anc 

'. . . we sit the expert 
In information technology 
down with the operating 
man and the engineer, 
'.he doer with the dreamer, 
'.he pragmatist . . . with 
'he planner . . ." 

however elegant your design — its purported benefici- 
aries would most certainly resist it. And they would 
be right in doing so. To the technologist, their re- 
sistance might seem like sheer human cussedness, man- 
kind's traditional response to any threat to his ac- 
customed ways. But, more fundamentally, any system 
that does not grow out of an organization's own ex- 
perience and that does not match its own definition 
of its needs and the results it seeks, just can't be 
a very good system. Participation isn't just a neces- 
sary precondition of acceptance; it is a prerequisite 
of effective design. 

All of which is just another way of saying that 
the information revolution — on the scale of one de- 
partment, one company or society as a whole — -is too 
important a matter to be left to the experts. It calls 
for the fullest possible range of management skills. 
In our experience, the best results are achieved by 
assigning information systems development to "mixed 
teams," each member of which brings to the job a 
different departmental interest, a different set of ex- 
periences. On these project teams, we sit the expert 
in information technology down with the operating 
man and the engineer, the doer next to the dreamer, 
the pragmatist who thinks in terms of today's results 
with the planner who is looking ahead to tomorrow's. 
It's our feeling that only by such a team approach 
can our business assure itself that a "system view" is 
being applied to the development of its information 
system and that their design will accommodate not 
only today's needs but the future's as well. 

It may be that some information specialists will 
object to so many strangers getting into their act. But 
most, I'm sure, will take it as a sign of the critical 
importance of their new profession to the effectiveness 
of modem management. And most, I think, will wel- 
come the team approach as an opportimity — and a 
challenging one — to bring their special competence to 
bear on the organization's basic goals. 

Data processing people, it seems to me, would do 


". . . managing the 
information revolution 
is going to take more 
than competence in 
technology . . ." 

their profession a disservice — and risk aborting the 
success of their own undertakings — should they pro- 
vide occasion for their colleagues in management to 
view them as a breed apart, an aloof priesthood in- 
habiting a cool world of their own. For, managing the 
information revolution is going to take more than com- 
petence in technology, demanding as that may be. It's 
going to require, not only that you know the com- 
puter and what it can do, but that you know your 
business in all its aspects — its operations, its markets, 
its people, its philosophy. Only as the information 
technologist applies his skills, not merely as a tech- 
nical expert but as a manager who understands his 
company's goals and is committed to them, can he 
make his maximum contribution to the job and the 
progress of his own profession. 

Now, there is an equal and corollary obligation on 
the part of general management. No manager can be 
a manager in this day and age, it seems to me, without 
at least a general grasp of the potentialities of the new 
tools your profession has developed and the risks and 
opportunities of applying them. That's why we in the 
Bell System are sending our managers back to school. 
Not only has each of our operating companies set up 
training curricula in data processing and data com- 
munications for their people, but we have also estab- 
lished at Cooperstown, New York a special school 
where selected engineers and management people from 
all across the System are subjected to an intensive 12- 
week course in the combined technologies of computers 
and their communications requirements. Already we 
have some 1,700 graduates of this school. Also at 
Cooperstown — and more recently at other regional 
schools — we have been rurming courses designed to 
acquaint our entire top and middle management — not 
excepting presidents — with the rudiments of informa- 
tion technology. In these courses it is not our purpose 
to create instant experts but rather to provide a basic 
grounding which will help our managers to partici- 

pate knowledgeably and responsibly in the application 
of information systems to their own operations. 

X T SHOULD be apparent by now that we in the 
Bell System are pretty well committed to the infor- 
mation revolution. We are training our own revolu- 
•We are training our ^^^ ^^^^ specifically are the goals we want to 

nvn revolutionaries: accomplish? To say it in one sentence— we are seeking 

advances in service, improvements in management and 
economies in operation. 

And what are we doing about it? How are we ap- 
plying the new information technology to our own 

There are, I'm told, some 220 different computer 
installations in the Bell System. Some are scientific 
machines, available on a time-shared basis to research- 
ers at various laboratory locations. Some work in our 
factories, programed for process and inventory con- 
trol and some are in our warehouses, taking orders for 
supplies over telephone lines directly from field loca- 
tions. Still others are assigned to the — by now— con- 
ventional accounting chores. 

All of these are internal applications, not different 
in kind from those you would find in many large 
businesses. More distinctive — and more critical — are 
those which have a direct bearing on the quality of 
our only product — service to the public. 

Let me give you two examples: 

At Bell Telephone Laboratories we are conducting 
a test of a new computerized system which will help 
information operators come up with the right tele- 
phone number even though the inquiring customer 
may not be sure of the spelling of a name or the 
accuracy of the street address. In response to such 
fragmentary information as the operator keys into the 
computer, a cathode ray screen displays the names, 
addresses and telephone numbers of the half-dozen or 
so people who match the customer's prescription. In 


". . . no matter how 
mechanized our operations 
become, the customer 
will always have a real, 
live human being 
to talk to . . ." 

our trials so far, the operator's performance was some- 
what faster than our traditional manual methods. But 
more important to us than this increased productivity 
is the fact that — with the computer's help — the per- 
centage of customers who got the information they 
were looking for was much, much higher. In short, this 
system promises to produce, not only better service 
for our customers, but more satisfying jobs for the 
employees involved. These results are reason enough 
to go ahead with this development. 

Another example: We have 25,000 business office 
representatives in the Bell System and, all together, 
they answer some half a million calls a day from 
customers, ranging from orders for new service to 
helping people with questions about their phone bills. 
Each of these young ladies is our ambassador to the 
public. She is the one we're thinking about when we 
say that, no matter how mechanized our operations 
become, the customer will always have a real, live 
human being to talk to should he encounter difficulties. 
Today we are readying a computerized Business In- 
formation System to help the service representative 
do her job. With this system, she will sit in front 
of an on-line terminal device with a cathode ray tube 
display. By keying information into the computer as 
the customer talks, she will be able to retrieve all 
the information she needs to complete the transaction. 
In fact, when the system we contemplate is fully de- 
veloped, she will be able — as she talks to a customer 
ordering new service, for example — to set up a com- 
plete computer file on the customer, assign a number, 
complete installation arrangements, at the same time 
providing other departments all the information they 
need to fulfill our commitments. 

I have recounted these examples in some detail 
because they embody our best hopes for the informa- 
tion revolution. We look to information teclinology, 
not to supplant people but to enhance their capabilities 
and enlarge their opportunities to exercise initiative. 


Oddly enough it appears to us that the information 
revolution — instead of draining work of its significance, 
as some of our dismal prophets would have it — offers 
unique opportunities to enlarge the individual's con- 
tribution and the satisfaction he derives from it. I hope 
we can make the most of these opportunities. 

And, while we're planning our new business infor- 
mation systems, I hope we can make the most of our 
opportunities to extend rather than limit the exercise 
of real responsibility on the part of our managers. In 
the popular conception, computerized information sys- 
tems inevitably have the effect of drawing the author- 
ity for decision-making closer to the top. Certainly the 
sheer cost of computers and their attendant program- 
ers and analysts argues for a centralization of effort. 
But that it argues for a centralization of authority, 
I would deny. Indeed, such an approach would in my 
mind represent a serious misinterpretation of the really 
great opportunities computers can afford us. 

To my mind the first criterion in charting the flow 
of information from a computer is the simple question 
"Who needs it?" And the only right answer to that 
question, it seems to me, is the man who can act on 
it most effectively. There may be some executives who 
take a perverse satisfaction in being the first to know 
when anything gets out of line anywhere in their 
domain. But there are greater satisfactions surely in 
getting the job done right in the first place and that 
. . . the first criterion can only be accomplished, not in the executive suite, 

. . . IS the simple question, but where the action is. 

Who needs it?'" That's why we in the Bell System have made it a 

prime requirement of our evolving business informa- 
tion systems that they provide our local manager with 
the data he needs — in the form in which he needs it — 
so that he can make his own decisions as to how 
best to serve his customers. The computer can tempt 
us in the direction of centralization and consolidation. 
But if the efficiencies of centralization can only be 
achieved at the cost of moving the authority for de- 
cisions affecting our customers further away from the 



". . . it may well be 
that your greatest 
contribution will prove 
to be the new freedom 
you provide management 
to direct its energies 
to the elusive, 
unstructured problems . . .' 

". . . the ultimate 
criterion . . . is . . . the 
scope and freedom . . . 
to serve people better." 

I would reckon that cost too 

communities we serve, 

One final thought on business information systems 
as a management tool. The technologies represented 
here in this room offer a tremendous potential for en- 
hancing the performance of American business. But 
there are limits to what information technology can do. 
When the information revolution has been won and 
its accomplishments consolidated, it may well be that 
your greatest contribution will prove to be the new 
freedom you provide management to direct its ener- 
gies to the elusive, unstructured problems — the human, 
social and political problems — which will shape the 
future of American business. 


/OOKiNG BACK over what I have been saying, 
I find four or five observations that might bear re- 
peating — not because they are original perceptions 
on my part — they aren't — but because they arise out 
of the hard-won experience of an outfit that is trying 
— as earnestly as any I know of — to apply the fruits 
of the information revolution to doing its own job 

First, the information revolution must be managed. 
Its costs are too high, the consequences of misapplica- 
tions too grave, simply to let it happen. 

Second, that the job of developing a business in- 
formation system bears so directly on an organization's 
structure, its adaptability to change and its capacity 
for decision that it can't be delegated to a corps of 
specialists. It is a general management responsibility. 

Third, such a system — for compatibility's sake, for 
optimum efficiency — must be planned comprehensively 
— systematically — rather than in bits and pieces. 

Fourth, that the planning job is best done by teams 
whose members bring to the job a wide diversity of 
interests, skills and perceptions, reflecting the range 
of interest of the entire organization. 

And fifth, the ultimate criterion of the business in- 

". . . how well we in- 
business manage the 
information revolution . . 
may well be the proving 
ground for its 
broader application . . ." 

formation systems we devise is not so much the kind 
and quantity of information they produce, or the effi- 
ciencies they provide, but the scope and freedom they 
afford for people to use their own initiatives to serve 
people better. 

Finally on this point, it appears to me that how 
well we in business manage the information revolution 
— for better of for worse — may well be the proving 
ground for its broader application to our society as a 
whole. There, I suspect, the criterion of success or 
failure will be the same. Surely it must not restrict 
the role of the individual but rather enlarge and en- 
hance it. And surely, too, it must provide new scope 
for attention to the problems that computers cannot 
and only man can solve. 

In giving this talk on "Managing the information Revolu- 
tion," Mr. Romnes dravi/s upon his experience in managing 
Bell System operations and his understanding of the people 
who perform those operations. His abiding concern in the 
development of a business information system in the Bell 
System is that the business and the men and w/omen who 
comprise it cannot be simply rebuilt to fit the needs of the 
machine. He stresses a thinking-through of organization 
structure and the necessity for a team approach, a mixture 
of telephone skills and experience with technical expertise, 
in developing a BIS. 

Mr. Romnes' Bell System career started in the summer 
of 1928, when he joined the technical staff of Bell Tele- 
phone Laboratries. He subsequently held many positions in 
engineering and operating. He became general manager of 
of the Long Lines Department in 1950, chief engineer of 
A.T.&T. in 1952 and vice president. Operations in 1955. Four 
years later he was made president of Western Electric Co., 
and in 1964 was elected vice chairman of the board of 
A.T.&T. At the beginning of 1965 he assumed his present 
position as president of A.T.&T, 


H. I. Romnes 







/daldb pjiAdovu 















C. K. Collins, Assistant Vice President, Operations-Traffic, A.T.&T. Co. 

■ When Robert Burns expressed the 
ancient human wish to see ourselves 
as others see us, he was also recognizing 
the equally ancient truth that fulfilling 
the wish, even partly, is always difficult 
and often impossible. 

If it is difficult for an individual to 
know truly how others see him, how 

much more difficult it is for a large or- 
ganization which must be concerned with 
how many people see it. The Bell Sys- 
tem exists by public franchise, by con- 
sent of the millions of people it serves. 
That consent is conditioned by the qual- 
ity of service as the public sees it. 
About five years ago a well-known re- 


search firm was retained to conduct 
depth interviews of Bell System em- 
ployees and management. The object: to 
find barriers to giving service from the 
customer's point of view. The survey 
showed that many telephone employees 
felt some internal measurements of serv- 
ice did not fully reflect the customer's 
viewpoint on the service he receives. 
Something more, something different, 
was needed. Subsequently a Bell System 
measurement committee was formed to 
examine and recommend improvements 
in measurement procedures. Among 
other things, the examination generated 
a new concept, a new customer-oriented 
technique for measuring service named 
the Service Attitude Measurement Plan 
— SAM for short. 

SAM provides a practical means of 
measuring telephone service as the cus- 
tomer actually sees it and has experi- 
enced it in specific situations. It affords 
a new view — from the outside looking in, 
on specific details of service perform- 
ance, pinpointed by specific customers in 
specific places at specific times, reported 
by districts within the companies — and 
a new basis for meaningful action. 

"We Would Like Your Opinion . . ." 

If you try to give a man advice, he 
may or may not listen. But ask his 
opinion of sometliing, and you had better 
be prepared to draw up a chair and 
listen. Customer response to the SAM 
Plan illustrates this point. The Plan is 
predicated on questionnaires sent to cus- 
tomers who have had recent contact 
(usually within a week) with business 
office, installation or repair service. In 
addition to these questionnaires, there is 
a general service questionnaire mailed to 
a representative cross-section of residence 

and non-PBX customers covering as- 
pects of service with which they have 
fairly frequent contact, such as local, 
long distance calls and information, 
quality of transmission, directory, help- 
fulness of employees, billing etc. Re- 
sponse to the questionnaires clearly 
shows that customers are willing to 
express their views freely and that 
they welcome this opportunity to be 
heard. Mailing of questionnaires is done 
on a random sampling basis under direct 
supervision of business research people 
in the companies. 

Customers to whom questionnaires are 
sent are selected from basic records: 
service orders for the installation 
questionnaire, trouble reports for the 
repair service questionnaire, contact 
memoranda for the business office and 
billing records for the general service 
questionnaires. About ten days after the 
initial mailing, there is one follow-up on 
any questionnaires not returned by then. 
Built into the processing procedure are 
safeguards against surveying the same 
customers too frequently. First, a com- 
plete record of all mailings is maintained. 
Second, all new selections based upon 
service contacts are checked against this 
record. All customers who receive a busi- 
ness office, installation or repair ques- 
tionnaiie are excluded from further 
samples for six months, as are all those 
who received a general service question- 
naire within 12 months. 

The study procedures have been tried 
and essentially proven in two districts in 
each of four Bell Operating Companies: 
New England, Chesapeake and Potomac 
of Maryland, Illinois Bell and Michigan 
Bell. The districts were selected for the 
trial to give the widest possible variety 
of service environment; they included 
metropolitan and suburban districts, dis- 


tricts which encompassed two large 
towns and a district with a small-town, 
rural flavor. The trial, which continued 
over a period of two years, was designed 
to obtain 200 responses to each of the 
four questionnaires in each of the eight 
districts surveyed. Return of the filled-in 
questionnaires averaged from 60 to 70 
per cent. 

The percentage of returns indicates 
more than just the fact that customers 
are willing to answer questions about 
specific aspects of their service; it also 
is clear evidence that the SAM method of 
soliciting opinion is quite acceptable in 

Name of the Game is action 

So far about half of the customers sur- 
veyed have tallied one or more criticisms 
of service. The pay dirt in the Plan is 
being found in the fact that such specific 
criticisms have uncovered trouble spots, 
some previously unknown, and have led 
to effective corrective action. 

In the phrase, "effective corrective ac- 
tion," effective is the key word. It has 
been manifested in concrete service im- 
provements many of which were ach- 
ieved through interdepartmental team 
effort. Force schedules have been ad- 
justed, equipment has been modified, 


r^- »S 

-"'-"-.~.,.:„,cr;^;i-;.™j ^,.^__,__^ 


"^^''" 1-^::;:;-' 

Q . 
D' . 


'samples of the foiti 

questionnaires used in the Service Altitude Measurement Plan give an 

idea of the variety 

of situations covered by the survey — 

and commented on by customers. 

new approaches have been found to solve 
the problems revealed. And where effec- 
tive action has been taken, subsequent 
SAM measurements have consistently 
indicated a downward trend of those 

One instance of the kind of trouble 
SAM can uncover, and the action being 
taken, is the case of an information office 
where, despite the fact that internal 
measurement was at a fully acceptable 
level, response to a SAM General Service 
questionnaire showed 29 per cent of the 
customers complaining of slow answers. 
Investigation revealed that performance 
for the total day as measured internally 
looked good because poor answering per- 
formance during the day was being offset 
by exceptionally good performance in the 

By concentrating on more accurate 
estimating of traffic volume and better 
force adjustment, management obtained 
a balanced performance over the whole 
day. Improved customer reaction was 
evident when complaints dropped nine 
percentage points in less than two 
months after the change. 

Again: one question in the Business 
Office questionnaire asked customers, 
"After you dialed the telephone company 
business office number did you have any 
trouble getting your call through?" Un- 
favorable answers ran toward 20 per cent. 
Remedial action was taken in three main 
steps: an accessability study was made 
of business office trunks and people; 
meetings were held for service repre- 
sentatives to create awareness of the situ- 
ation; an adjustment was made in the 
force requirements in the office. As a re- 
sult of the action, the unfavorable cus- 
tomer comments dropped from 20 per 
cent to 8 per cent in about three months. 

Similar examples of trouble uncovered 

and of effective corrective action are 
found in the Plant Department. One 
trial district found that they received 
more favorable responses to questions 
about repair service when they foUowedi 
these simple rules which apparently were_ 
meaningful to the customers: 

• Advise of any necessary delay. 

• Advise, whenever possible, that re- 
pair work is in progress. 

• Notify, in all cases, when the trouble 
is cleared. 

These are fundamental steps, some- 
times forgotten, but particularly impor- 
tant to the customer when, as often 
happens, he can't see the repair work 
going on. This is one of the salutary] 
effects of SAM: it seems to send us back 
to the fundamentals of operating the 
business — service to the customer. 

There are other examples of troubles 
uncovered and corrected which stress the 
importance of interdepartmental action 
in working effectively with SAM. 

To Supplement, Not Replace 

During the earlier days of the Service 
Attitude Measurement Plan trial, its ul- 
timate objective was sometimes mis- 
understood as being intended to replace 
existing internal measurements. While 
some technical measurements might 
eventually be eliminated or altered, it is 
certain that many will continue to be 
needed. Actually, internal technical 
measurements are administrative tools 
designed to provide detailed information 
regarding specific operations — to help 
operating people locate and correct weak 
spots in specific aspects of service before i 
customers bring them to our attention. 

The two types of measurement — ex- 
ternal, such as SAM, and internal — 
are complementary, not mutually exclu- 


sive. External surveys of customer opin- 
ion indicate whether or not the company 
is meeting its real objective: that cus- 
tomers be satisfied and pleased with the 
quality of service received. Internal 
technical measurements give detailed in- 
formation about operations to help tele- 
phone people analyze performance and 
direct action to correct any weakness 
found; this also might affect customers' 
attitudes toward service. Time and exper- 
ience will enable Bell System people to 
achieve a useful, working meld of the 
two kinds of measurement. 

This will be a period of adjustment for 
many telephone people who see estab- 
lished methods of judging quality of 
service changing — but they will find 
SAM very helpful in their efforts to 
truly improve service from the customer's 

viewpoint. With the help of A.T.&T.'s 
interdepartmental steering and working 
committees, the new Plan is in the 
process of expansion throughout the Bell 
System. Evidence gathered to date shows 
clearly that SAM methods are sound and 
acceptable, that the Plan is sensitive to 
specific corrective action, and that it can 
make a positive contribution to improved 
service through concrete action on the 
part of the people who use the Plan. 

SAM will require new skills for its 
effective use and a new outlook in ap- 
plying those skills. It is a new method 
in a world alive with new methods. And 
it promises to be one of the best means 
the Bell System has to help achieve its 
objective: customers who are satisfied 
with the service the Bell Telephone 
Companies provide. 

As chairman of A.T.&T.'s interdepartmental SAIVI com- 
mittee, C. K. Collins is well qualified to write about the 
successful introduction of the Service Attitude Measurement 
Plan in the Bell System. 

A large part of Mr. Collins's 42-year telephone career has 
been in the Traffic Department, where he has lived and 
worked with the various types of internal measurements 
designed to insure effective operation. This broad back- 
ground of experience serves well now as he contributes 
A.T.&T. staff guidance to the new SAM Plan. 

Mr. Collins joined the Bell System in 1924 after grad- 
jating from Amherst College, and worked in the Traffic 
Departments of both New York Telephone and New Jersey 
Bell Telephone. He came to A.T.&T. in 1941, became 
Traffic results engineer in 1945, worked in the Commercial 
Department as sales and servicing engineer and served on 
:he staff that organized the Bell System Executive Confer- 
Jnce at Asbury Park. In 1955 he assumed his present po- 
sition as assistant vice president. Operations — Traffic. 

C. K. Collins 


"Top management should have models available of important activity 
areas which are organized so that assumptions, key factors and 
constraints can be changed and various capabilities, strategies or 
consequences can be explored in a way that gives the manager the <j 
best chance of arriving at a successful and fully-informed decision. 
This can be accomplished. . . ." 




Dr. Edward Ziijac and Peter Rosofj discuss a 
mathematical model: "As a result of rate 
changes in Service B, you'll have reciprocal 
revenue effects in Service A; all these are 
interdependent so far as revenue effect is 
concerned, and are interactive. . ." 


■ The statement quoted on the facing 
page is from a description of a basic 
management analytical support center, 
which was presented to the officers of 
A.T.&T. The theory of such a center is 
postulated on its functioning as an aid 
to, but not a substitute for, management 
judgment. This function is a relatively 

new means of generating information to 
help support management decision- 

More specifically, it is a relatively new 
application of existing means to an old 
problem. To create a corporate organism 
equipped to evaluate the maximum 
amount of useful information and pre- 



sent it in a viable form for a given situ- 
ation, it is necessary to integrate appro- 
priate professional skills in a cohesive 
but flexible organization. This requires 
a group of individuals whose skills are a 
blend of the experience and competence 
of operating management with the tech- 
niques and disciplines of professionals 
such as engineers, marketing strategists, 
computer programers, mathematicians, 

statisticians, economists and others. 
These people apply the instruments of 
modern synthesis and analysis and are 
fed by a well-organized management in- 
formation source. To put it another way, 
the analytical support function applies 
the principles of systems engineering 
( the existing means mentioned above ) 
to the organization of management in- 
formation (the old problem). 

Dr. Milton Terry in downtown New York Citv programs a computer in Valley Forge. Pa. 
"The average holding time on these is- two hours; we're going to need more access circuits . . ." 


The individuals comprising the analyt- 
ical support center at A.T.&T. form a 
combination of skills unique in the Bell 
System, a mixture of sophisticated pro- 
fessional disciplines and advanced aca- 
demic achievement. While the center 
itself is a permanent operating entity, its 
structure is extremely flexible, and the 
people who work in it may move in and 
out as their special contributions are 
needed. A brief summary of the back- 
grounds of those who have shared in the 
work of the analytical center in the past 
or are presently engaged in it, may help 
illuminate its structure. 

Harvey J. McMains, who heads the 
group, is a registered professional engi- 
neer, holds degrees in mathematics and 
physics, has also studied law, and was 
new services coordinator before assuming 
his present position. R. M. Gryb, elec- 
trical engineer, has been a member of 
the technical staff at Bell Laboratories 
and now handles statistical analysis and 
market research. Merle C. Conley, regis- 
tered professional electrical engineer, was 
new product analysis supervisor at 
A.T.&T. before joining the support cen- 
ter. Edward E. Zajac, Ph.D., is a member 
of the Mathematical Physics Department 
at Bell Laboratories, and specializes, 
among several things, in advanced com- 
puter programing, including computer 
solutions of partial differential equations 
and computer-made graphics and movies. 
H. S. McDonald. Dr. of Engineering, has 
taught electrical engineering, has worked 
in communications theory and computer 
science and is head of the Information 
Processing Research Department of Bell 
Laboratories' Computing Science Center. 
Peter Rosoff, economic analyst, has the 
S.M. in industrial management and has 
the responsibility, among other things, 
for working with outside consultants in 
preparing testimony for the FCC Inter- 
state Rate Inquiry. Milton Terry, Ph.D., 
statistician working in statistical data 
analysis, was associate professor of en- 
gineering statistics at Virginia Poly- 

technic Institute and now is director of 
Computer Projects Research at Bell Lab- 
oratories. S. M. Fulda, engineering econo- 
mist, holds the M.S. in applied mathe- 
matics, is now studying toward the Ph.D. 
in mathematical economics and is a 
member of the Transmission Systems and 
Switching Systems Engineering Divi- 
sions at Bell Laboratories. Neil Bernstein, 
with degrees in political science and law, 
has been a contributor to many legal pub- 
lications and is now an attorney at 
A.T.&T. and a special consultant in law 
for the analytical support center. R. R. 
Auray has the M.A. in economics and 
statistics and now is working toward the 
Ph.D. in economics; he is a general busi- 
ness research manager at Long Lines. W. 
T. Esrey, economic analyst, has the Mas- 
ter of Business Administration degree 
and worked in the economic studies group 
of A.T.&T.'s Business Research Division 
before being loaned to the analytical sup- 
port function; he is now in New York 
Telephone's Comptroller's Department. 

This abbreviated sketch cannot con- 
vey the essence of the operation as it 
takes place day to day — the constant 
interplay of ideas, opinions, approaches 
generated by these skilled, highly trained 
people, each an expert in his field. 

Means to the End 

Much has been said, and is being said, 
about the importance of current informa- 
tion in the decision-making function of 
management. The Bell System's emerg- 
ing business information system, for ex- 
ample, (see BTM, Summer, '65) is at 
least partly dedicated to providing man- 
agement with up-to-the-minute data on 
any part of the operating system. Real 
time is the operative term in this concept. 
While present intelligence derived from 
computerized information sources may 
well be grist for the mill of future action, 
providing the real-time status of any 
area of corporate activity is not the 
mission of an analytical support center. 
It is, rather, the structuring of models 



with which management can "play," as 
military strategists do with war games. 
It behooves the man of business, as it 
does the man of military strategy, to ex- 
amine and manipulate, so far as he can, 
the variables in a given problem to the 
end that his informed judgment may 
guide him at the moment of truth when 
he commits his forces. 

Lest the reference above to playing 
with models be misconstrued as frivolous 
through a simple accident of language, 
let it be understood that the models in 
this context are immensely complicated, 
often require thousands of man-hours of 
the most sophisticated analysis to con- 
struct, and that "playing" with them for 
useful results demands a high order of 

The word "model" suggests a three- 
dimensional object, and indeed, some of 
the models constructed by the analytical 
support center take a three-dimensional 
form. Some can be manipulated to show 
an almost infinite number of relationships 
between variables and the consequences 
of these relationships. Other models may 
take the form of print-outs from a com- 
puter; some are actually computer-made 
movies — dynamic models — produced by 
extremely sophisticated programing of 
the machine, which projects the moving 
lines of a chart or graph upon a cathode 
display tube, which in turn is photo- 
graphed. One of these, for example, 
shows the relative costs per mile of Long 
Lines circuits, with and without micro- 
wave radio relay, by dates, over a 20- 
year period. 

There are still other models in which 
the parameters, assumptions and con- 
straints of a given problem are defined 
and manipulated with the esoteric lan- 
guage of higher mathematics, usually on 
large two-by-three-foot pads of paper and 
in several colors. 

These generalizations give some idea 
of the physical properties of analytical 
models. But more important than this 
is the underlying purpose of their devel- 

opment and the techniques of their em- 

The management support function 
entails developing the "realizations" of 
verbal management models; supporting 
special management studies; supporting 
engineering costing; supporting market 
research; supporting the rates and regu- 
latory staff; developing better methods 
for preserving data; providing field trial 
facilities in real-time computing for 
A.T.&T.'s Treasury Department and Bell 
Telephone Laboratories for the imple- 
mentation of BIS, etc.; providing compu- 
tation support for Marketing (Long 
Lines Department large customers, etc. ) ; 
providing a computation support for 
combined Laboratories-Engineering-de- 
veloped programs; and providing training 
facilities, as required, in the techniques 
of analysis. 

Background For Testimony 

The primary mission of the analytical 
support center, since its organization in 
October, 1965, has been that of providing 
material in support of testimony given 
by A.T.&T. people and outside consult- 
ants before the FCC during the opening 
of phase one of the Interstate Rate In- 
quiry. One task, for example, has been an 
examination of the overall demand and 
market for Bell System services. As de- 
scribed in a presentation prepared for 
A.T.&T. management, the task would be 
approached in these logical steps: 

• Search and assemble for review rele- 
vant statistical sources to be used in de- 
veloping demands and growth analysis of 

• Request all elasticity and demand 
studies made in the past by the Asso- 
ciated Companies. 

• Examine study of customer opinion 
of flat rate and measured service made 
by the Business Research Division. 

• Examine specific factors to formu- 
late mathematical models to explain cus- 
tomer behavior. 

• Assemble entry and exit tests for 


types of services and equipment offerings; 
this relates to interconnection and inter- 
face problems. 

• Study existing and potential compe- 

• Analyze the effects of removing dis- 
tance factor rates. 

• Analyze the effects of providing 

fully-measured service. 

This example is given simply to indi- 
cate the kind of fimdamental thinking 
which is typical of the analytical support 
function. Details of the analysis and 
structuring of models to fulfill the assign- 
ment are technically beyond the scope of 
this article; some visible evidence of the 

All arithmetic econometrics model used in a meeting to plan a program for computer analy- 
sis, which in turn will be used to support figures on rate structures in testimony before FCC. 


techniques involved may be gained from 
the accompanying illustrations. 

Spectrum of Purposes 

Although much of the initial effort of 
the analytical support center has been 
committed to material for the FCC In- 
quiry, the ultimate purpose of the center 
is broader and far more general than that. 
An interrelated set of economic models 
is being developed which can describe 
the major sections of the Bell System 
and all of the relevant interactions be- 
tween them, and which, when used with 
a sound data base, can serve as a major 
support for corporate decision-makers 
and for other purposes. The basic model 
units in such a project would include 

Engineering: Plant facilities, including 
capitalization; construction program; 
operating expenses; research and devel- 
opment and current engineering; and 
competitors' facilities. 

Service offerings: Government services; 
standard offerings by categories, i.e., 
business, residence, horizontal, vertical, 
etc.; new existing services and proposed 
and possible services; and competitive 
non-Bell services. 

Rates: Structures; levels; rate element 
unit charges; and competitors' rate poli- 

Economics: Demand determinants; 
money supply; utility of service; and 
market characteristics. 

External forces: Time pressures; eco- 
nomic climate; and regulatory, social and 
political environment. 

Spelled out, even in capsule form, that 
is a mission of staggering size. But it is 
under way, and the organization exists 
to acquire, process and use an ade- 
quate statistical data base to define and 

(Left) Dr. Zajac, foreground, uses computer 
program he wrote to help Merle Conley re- 
construct decision tree as Peter Rosoff 
listens. At right is completed decision tree. 

exploit these economic models for man- 
agement decision-makers. 

One graphic tool in frequent use in 
the analytical support function is the 
decision tree. This extremely flexible 
device consists of triangles, rectangles 
and diamonds equipped with magnetic 
tabs and labeled with questions and as- 
sumptions. Construction of a tree starts 
at the top and proceeds in logical order 
downward. It makes explicit all major 
factors contributing to a decision and 
forces appropriate consideration of them 
by requiring a connected chain of "yes" 
and "no" answers. Specifically, the ad- 
vantages of a decision tree can be sum- 
marized as follows: 

• It forces a clear problem statement 
and shows where information is missing 
or whether studies are needed. 

• It forces a complete logical descrip- 
tion of the problem. 

• It completely defines, at an overall 
level, decisions to be implemented. 

• It permits development and orderly 



presentation of systems too complex for 
effective discussion by ordinary means. 

• It is a superior form of documenta- 
tion for communication among — for ex- 
ample — economists, technologists, mar- 
keters and rate people. 

• It is easy to update and revise and 
shows clearly the effects changes will 
make upon the decision logic. 

• It permits problem definition and 
description without imposing a prema- 
ture sequence of problem-solving opera- 

• It is a technique that is easily 

• Because of its chain of "yes-no" an- 
swers, it is suitable for direct translation 
into machine language where mechaniza- 
tion is desired by administrators. 

We Are Not Alone 

From what has been said, it is clear 
that application of such sophisticated 
techniques as those described is rela- 
tively new in the Bell System. We are 
by no means alone, however, in using 
these techniques. The analytical support 
concept is becoming fairly widespread 
throughout private industry in this 
country. General Electric, for example, 
has a successful corporate-level analytical 
studies activity. Xerox is actively build- 
ing what they call a "computerized cor- 
porate model." Most auto manufacturers 
have analytical study groups dispersed 
throughout their operational divisions; 
Ford is currently enlarging its analysis 
staff. Some of the major airlines have 
analysis groups studying such things as 
the interaction between air travel and 
rates. Certain food, chemical and petro- 
leum companies have successfully used 
analytic techniques to solve corporate 
problems. And the considerable increase 
in the recruiting of skilled people to 

work in these areas indicates an upsurge 
of interest generally in corporate ana- 
lytical studies. 

In Government, too, there is currently 
a large, across-the-board trend toward 
analytical studies. The Bureau of the 
Budget has been asked to allocate "funds 
as required" for this purpose. The De- 
partment of Defense has been very suc- 
cessful with its major cost analysis and 
reduction program, which is based on 
several analytical models. As an indirect 
result, the Brooks Bill, passed in 1965, 
assigned to the National Bureau of 
Standards the technical "overview" re- 
sponsibility for quantative analysis, com- 
putation, data processing and systems 
engineering in all government agencies. 
A Federal Data Center is being or- 
ganized. And many Federal agencies are 
setting up analytical studies, including 
an interesting one in which the Inter- 
state Commerce Commission is attempt- 
ing to apply the techniques of automation 
to rate-making functions. 

Obviously, the amalgam of sophisti- 
cated technical skills with management 
experience and competence is neither en- 
tirely new nor exclusively the property 
of the Bell System. Wherever it is foimd, 
however, it is symptomatic of new needs 
in management decision-making and of 
new means to meet these needs. That it 
has concrete, useful applications is clear- 
ly beyond question. Its usefulness, how- 
ever, must always be qualified by one of 
the vital intangibles in any business en- 
terprise: the judgment of management 
based on experience, which is a human 
faculty partaking of elements which can- 
not be precisely expressed in figures of 
any kind. A decision rests where it must: 
with administrative heads of the enter- 
prise. The analytical support center gives 
management one means of estimating 
what would be the consequences of a 
certain course of action before commit- 
ting men, money and time to its execu- 
tion. It helps the manager to see what 
would happen — if. 



One of many large pads covered wiili inallicniatical shorthand stands outside the office of 
Harvey J. McMains, who heads A.T.&T.'s analytical support center at 150 William St. 


With the help of ISC, the Bell System sales- 
man can offer a customer one-order service 
on a controlled-installation-date basis. 

A new, more efficient way 
to give business customers 
complete, coordinated service 


ISC — just one more set of initials? 
Perhaps. But one with the promise of 
much better service to telephone cus- 
tomers. The letters stand for "Intercom- 
pany Services Coordination" — a plan 
that provides another step in improved 
service for business customers who need 
out of state or out of town service. 

And what does ISC do to provide that 
step? It makes it possible for the Bell 
System to give its customers one-order 
service — uniform, dependable and on a 
controlled-installation-date basis, whether 
it be between two points or involve a 
complex multi-point network. 

Progress itself — especially in commu- 
nications — has made this kind of service 
increasingly difficult in the last ten years. 
In the past, telephone services were rela- 
tively simple. Today, the services we can 
provide are tremendously expanded — 
data and private line services, WATS — 
and they have grown in their complexity 
and requirements. We are being asked to 
look ahead, to provide and coordinate 
services and equipment which were in the 
realm of dreams just a few years ago. 
Furthermore, in this day of geographi- 
cally dispersed markets, we face an in- 
increasing demand by businesses, both 
large and small, for greatly expanded na- 
tionwide services involving highly sophis- 
ticated equipment needs — both for com- 

munications and customer-owned equip- 
ment. Indeed, not only are we facing an 
increase in demand for the number of 
such services, but the rate of increase is 
growing as well. 

Meeting this demand requires a new 
and better plan for coordinating Bell 
System inter-company and inter-area 
services; it necessitates complete coordi- 
nation and uniform understanding in all 
company and departmental procedures. 
The crux of the problem is not capa- 
bility: it is coordination. Clearly we need 
to operate as a perfectly integrated team. 

All Speak The Same Language 

Developing a plan to meet this goal 
was, in this increasingly complex busi- 
ness, not easy; it took almost four years 
of planning and development. It is de- 
signed so that all parts of the Bell Sys- 
tem — and independent telephone com- 
panies — are speaking the same language, 
so that there is uniform policy and prac- 
tice. Essentially, ISC defines what every- 
body affected should be doing at all 
times; it provides a clearing house of 
authority which can direct and control 
orders and assign specific accountability. 
It coordinates the implementation of all 
inter-company or inter-area Private Line 



Services (including Long Lines) and 
Special Exchange Services (those which 
use the Direct Distance Dialing network, 
such as TWX, WATS and DATA- 
PHONE service ) . It gives the customer 
complete, coordinated service to any 
place outside his own local area — within 
or across state borders, across the United 
States, even to Canada and Hawaii. 

ISC is flexible enough to be adaptable 
to all manner of different services and 
projects, to all departments in all com- 
panies and areas and, with minimum 
modifications, to electronic data process- 
ing methods. It makes it possible to meet 
customer service dates and schedules by 
means of the fast exchange of standard 
instructions and specifications on any 
job. In sum, ISC makes it possible for 
22 Bell Operating Companies, Western 
Electric, Long Lines and the independent 
telephone companies to give the unified, 
coordinated total communications service 
that a customer wants and needs. 

And just how does ISC do this? Basi- 
cally it is a team plan, with interacting 
layers of interdepartmental teams, each 
with specific responsibilities. The key 
operational teams are the Area ISC 
Teams, assigned to each Operating Area 
of each Associated Company and to each 
Long Lines Department Sales Office. The 
Area ISC Teams are composed of repre- 
sentatives of the Marketing, Engineer- 
ing, Plant and Traffic Departments and 
Western Electric; they function as pro- 
fessional coordinators — the designated 
contacts for the interexchange of infor- 
mation regarding intercompany services 
—and are responsible for all intercom- 
pany services in their area. The Area 
Teams are backed up by interdepart- 
mental Data Specialist Teams which 
stand ready to furnish advice and as- 
sistance on specific requirements and 
problems. Behind these teams are the 
interdepartmental Administrative Teams 
which act in a staff capacity to maintain 
and administer the plan on a uniform 
basis; these teams review problems 

monthly and act as coordinators with 
the "Working Committee" at AT&T 
Finally, there is an AT&T Steering Com- 
mittee which monitors the ISC plan, 
measures its effectiveness and recom- 
mends any modifications that might be 

How It Works 

Although this might soimd compli- 
cated, the plan is essentially quite sim- 
ple. It is all summed up in one word — 
coordination. For example, a telephone 
company salesman in Milwaukee sells 
one of his customers a data system with 
terminals in Milwaukee, Atlanta, New 
York and San Francisco. This salesman 
then prepares a work sheet listing the 
details of the customer's requirements. 
The work sheet goes to the Wisconsin 
ISC team which then becomes the con- 
trol team for this particular project. 

This team, as noted before, is made up 1 
of representatives of Western Electric 
and of the Plant, Traffic, Enginering and 
Marketing Departments — and each has 
a definite function. For instance, the 
ISC Engineering representative is re- 
sponsible for the overall design and 
equipment; the W.E. member provides 
information on equipment availability 
and delivery; the Plant representative 
needs to furnish information on installa- 
tion, testing and maintenance and then 
schedule plant test dates; the Traffic 
member must help develop and design 
such information as when and how the 
customer's employees will be trained to 
handle the new service and determine 
how long this will take. The ISC Market- 
ing representative, as liaison for the 
salesman and the customer, is chair- 
man of the team and is responsible for ' 
preparing, distributing and maintaining 
status information on the System Service 
Order — a uniform and controlled docu- j 
ment which furnishes all the information * 
the teams need to establish a service. At 
this point, a service due date is set. This 


Plant / Traffic 
Western Electric 


Bell-Independent Relations 
Data Specialist 

ong Lines 
ISC Teams 

Milwaukee customer wanting data system witli terminals in Milwaukee, Atlanta, New York 
and San Francisco is assured of coordinated action on his order through ISC plan. Wisconsin 
ISC team controls the order and coordinates the work of ISC teams in other areas involved. 

coordinated information is also available 
to the salesman and, through him, to the 

The Wisconsin ISC team, the control 
team, now sends a copy of this System 
Service Order to the ISC teams in the 
other companies or areas involved; in 
this case Atlanta, New York and San 
Francisco. These other teams become 
the non-control teams in the project and 
must send an acknowledgement of the 
order to the control team, an additional 
check for control and accountability. 
When they receive the order, they check 
it, adapt it to their own internal service 
order procedures and proceed with the 
project. If necessary, their Data Special- 
ist Teams are on tap to provide them 
with any special information and assist- 
ance they might need. 

This plan also provides for such con- 
tingencies as a due date in jeopardy or 

one part of the project going off schedule. 
For instance, if a problem develops for 
one of the non-control teams (a delay 
in equipment delivery, for example), 
they must send a report to the ISC con- 
trol team. The control team notifies the 
salesman who can then relay this knowl- 
edge to the customer, with up-to-date in- 
formation as to the problems and the 
new date the entire system will be opera- 

The end result: coordinated one-order, 
controlled-installation-date service, with 
accountability for all aspects of the proj- 
ect. This is as it should be. The cus- 
tomer wants uniform service for all his 
locations, and we must provide the com- 
plete package. We must coordinate — for 
the sake of our customers and to achieve 
our own high standards of performance. 

And that is just what ISC is designed 
to do. 




A.T.&T, filed written testimony on operating re- 
sults and rate base 

Bell Exhibit 1 — Knut Sandbeck, general accountant, A.T.&T., 
points out that earnings ratio based on net operating earnings and 
average net investment as recorded for interstate and foreign opera- 
tions for the year 1965 was 7.78%. However, when adjustments are 
made for all known changes ( as required by the Commission's order 
of December 2i — such as the new Denver Plan for separations, the 
$100,000,000 rate reduction, bargained-for wage increases and others 
— a figure of 6.90% results. That is what the earnings ratio would 
have been had all such changes been in effect throughout 1965. He 
qualifies this, noting that it is not intended to imply that this repre- 
sents actual conditions for any given period or that it should be re- 
garded as a "going basis" for the future. 

Bell Exhibit 2 — A. Max Walker, general accountant, A.T.&T., 
presents an analysis, with adjustments, of investment statement of 
Bell System Interstate and Foreign services. 

Bell Exhibit 3 — Robert F. Wentworth, special accountant, 
A.T.&T., describes the computation of Cash Working Capital needed 
in the provision of interstate communications services. In measuring 
the Cash Working Capital element of the rate base, he presents the 
interstate portion of actual Cash, Working Funds and Temporary 
Cash Investments. In addition he describes lag studies made as a 
second component in the measurement of Cash Working Capital, the 
purpose of such studies being to measure operating costs, including 
taxes, paid in advance or in arrears of the receipt of revenues from 
customers. The combination of the actual cash amounts and the results 
of the lag studies determines the amount of Cash Working Capital. 

Bell Exhibit 4— Donald A. Dobbie, general accountant, A.T.&T., 
describes allocation to Interstate of the cost to the General Depart- 
ments of furnishing services to the Bell System operating telephone 
companies and to the Long Lines Department, the investment required 
and the incidental revenues from such investment. 

Bell Exhibit 5 — Dr. G. L. Bach (then) Maurice Faulk professor 
of Economics and Social Science, Carnegie Institute of Technology, 


FCC Docket No. 16258 

Interstate Rate Inquiry 

Phase One: Operating Results and Rate Base 

Rate of Return 

Ratemaking Principles and Factors 

(now) Frank E. Buck professor of Economics and Public Policy, 
Stanford University, presents evidence that inflation has been a 
persistent problem over the last quarter century or more and is 
likely to continue. He examines impact of inflation on different sectors 
of the economy, especially business corporations. He points up how 
the non-regulated business corporations have managed to protect them- 
selves against inflation and concludes that inflation should be taken 
into account in designing an effective and equitable regulatory policy 
for public utilities. 

Bell Exhibit 6 — Dr. George Terborgh, research director. Machin- 
ery and Allied Products Institute, deals with the effect of changing 
price levels on the reckoning of depreciation expense and presents the 
broad theoretical or philosophical aspects of underdepreciation. He 
observes that current-dollar depreciation is valid for regulated industry 
where the problem is greater due to generally longer lives of its fixed 
assets and higher depreciation expense per dollar of revenue. 

Bell Exhibit 7 — Richard W. Walker, partner, Arthur Anderson 
& Co., presents a statement on interpretation and application of 
accounting records of cost in a regulatory proceeding in the light of 
the steady erosion of purchasing power of the dollar over the last 30 
years, addressed solely to cost principles of utility ratemaking. He 
concludes "indexes as to purchasing power of the dollar are now well 
proven and objective and should be incorporated into the process of 
rate regulation on a cost basis. Rate regulation using original cost 
expressed in current dollars and related depreciation amounts provides 
an equitable, efficient basis for balancing consumer and investor in- 
terest; historical original cost no longer serves this function because 
of long-term changes in the purchasing power of the dollar." 

Bell Exhibit 8 — Dr. Arthur R. Tebbutt, professor of Statistics, 
Northwestern University, gives specific evidence of upward price 
movement as seen in an examination of price indexes; all price indexes 
indicate a sharp upward movement from the end of World War II. He 
examines three in particular — Implicit Price Index, Consumer Price 
Index, Telephone Price Index — which can be used to translate his- 
torical original cost of plant investment into 1965 dollars. He then 
examines the process of statistical deflation by which this is done. 



Bell Exhibit 9 — John I. Boggs, cost engineer, A.T.&T., presents 
and explains calculations made to translate original cost of tele- 
phone plant into current dollars which may be related to current 
revenues and expenses to obtain a more consistant measurement of 
the ratio of net operating earnings to net investment. He notes that 
this ratio is significantly higher when calculated on historical dollars 
than when calculated from an economic point of view adjusting for 
changes in the dollar's purchasing power. 

MAY 2 

A.T.&T. direct written testimony filed on general 
economic principles and rate of return; final noti- 
fication to F.C.C. by A.T.&T. of names and topics 
of all its phase one witnesses 

Bell Exhibit 10— Dr. Paul W. McCracken, Edmund Erza Day 
University Professorship of Business Administration, Graduate School 
of Business Administration, University of Michigan and former 
member of the President's Council of Economic Advisors, emphasizes 
that our nation now has a statutory declaration on national economic 
policy that commits us to use all our programs to attain maximum em- 
ployment, production and purchasing power. He points out that our 
economy must grow at an exceptionally rapid rate in the coming years 
if jobs are to be created to absorb our fast-growing labor force and if 
living standards are to continue their rapid rise. He emphasizes that 
the dynamic processes through which our economy achieves progress 
are to hold out the lure of high rewards to those who lead and impose 
profit penalties on those who lag behind. He sums up that a careful 
appraisal of the emerging economic environment leads to the inescapa- 
ble conclusion that the zone of reasonable profits for the Bell System 
will need to be somewhat higher than during the last decade, and the 
rate of growth which the nation will need suggests earnings in the upper 
end of this zone. 

Bell Exhibit 11 — F. J. McDiarmid, manager. Securities Depart- 
ment, Lincoln National Life Insurance Company, reflects the pro- 
fessional investor's opinion in pointing out that A.T.&T. needs earn- 
ings on equity comparable to those of other companies with heavy 
capital requirements and similar growth characteristics. He empha- 
sizes that A.T.&T. must compete for capital against all other well- 
regarded companies and that its earnings must be comparable to at- 
tract funds over the long run and thus provide service. He also notes 
the growing elements of competition and risk and the non-essential 
A.T.&T. services which indicate that A.T.&T. should not be forced 
into higher debt levels. 


Bell Exhibit 12— Charles W. Buek, president, United States 
Trust Company of New York, discusses factors a professional in- 
vestment manager considers in deciding whether to buy and hold 
A.T.&T. common stock in investment portfolios he supervises. He 
makes the point that earnings growth has become a much more im- 
portant factor in investor's evaluation of stock in recent years than 
dividends and that the best way to maiximize dividend yield over the 
long run is to invest in companies with growing earning power. He notes 
that the risks on A.T.&T. stock are broadly comparable to those of 
other common stocks and that A.T.&T. competes with all other possi- 
ble investments in its quest for capital. He points out that if A.T.&T.'s 
rate of return is lowered in the future, earnings growth will be retarded 
and the common stock cannot be expected to do well; professional 
investment managers would be deeply concerned if this were to happen, 
because of their clients' interests in the stock and because of the 
important role A.T.&T. plays in the well-being of the economy. 

Bell Exhibit 13 — Gustave Lehman Levy, general partner, Gold- 
man, Sachs, & Co., reviews A.T.&T.'s efforts to raise capital in 
the face of inadequate earnings during the early postwar period and 
points out that A.T.&T. would encounter similar or greater problems 
in today's market should current earnings decline. He notes that 
unless A.T.&T. promises expectation of continuing growth compara- 
ble to that of other businesses, investors' money will go elsewhere and 
that if the rate of return were to retreat to uncompetitive levels the 
supply of capital would be shut off. 

MAY 23 

Filing of further A.T.&T. direct testimony on gen- 
eral economic conditions and rate of return 

Bell Exhibit 14 — John H. MoUer, senior vice president and 
member of Executive Committee and Board of Directors, Merrill, 
Lynch, Pierce, Fenner & Smith, presents the small investor's viewpoint 
on common stocks in general and A.T.&T. in particular. He points out 
that the individual investors generally expect to obtain from an invest- 
ment in A.T.&T. stock a measure of dividend return and price appre- 
ciation reasonably close to those they obtain from other investments. 
He thus concludes that A.T.&T. must have earnings on its equity 
reasonably like those of other corporations if it is to maintain a com- 
petitive position for financing the future growth of its service to the 



Bell Exhibit 15 — Adrian M. Massie, former executive vice presi- 
dent and chairman of the board. New York Trust Company and 
former chairman and now a member of the Trust Committee of Chemi- 
cal Bank New York Trust Company, reviews the impact of postwar 
changes in the national economy on the capital and investment mar- 
kets and particularly on A.T.&T. stock and its earnings requirements. 
He emphasizes that institutional investors, a growing factor in the 
investment market, concentrate more and more on earnings trends and 
price performance of stocks, that A.T.&T. earnings through much of 
the postwar period have not kept pace with those of competing invest- 
ments (a fact that is becoming more obvious because of the concen- 
trated studies of earnings and price performance of various stocks ) , 
and that if A.T.&T. is to attract equity capital from institutional 
sources in the future somewhat better earnings on equity will be 

Bell Exhibit 16 — Robert R. Nathan, president, Robert R. Nathan 
Associates, documents the view that the nation and its requirements 
for communications services will be growing at a much more rapid 
pace during the next decade. He says it is the unique nature of 
public utility industries that their growth and development not only 
are linked to the economy — but must precede it. In today's growth 
economy they must lead in extension and technological intensification; 
they must anticipate demands and there are substantial risks asso- 
ciated with this lead position, including heavy advance capital outlays. 
He stresses that the F.C.C. has the responsibility to carry out its 
regulatory mandate, but simultaneously to permit a framework of 
incentives and rewards for the Bell System so that regulation does not 
dull the motivation for performance. He analyzes how in the perspec- 
tive of public policy for a full employment economy, the problem of 
regulation is a matter of arriving at a "full employment rate structure" 
and a "full employment rate of return." He also emphasizes that the 
Bell System has made outstanding contributions to the national econ- 
omy and in terms of innovation and quality of service. He concludes 
that the needed rate of return cannot likely be less than that of the 
recent past and may have to be higher. 

MAY 26 

A.T.&T. filed additional written testimony on rate 
of return 

Bell Exhibit 17 — Dr. Walter A. Morton, professor of Economics, 
University of Wisconsin, analyzes A.T.&T. earnings requirements 
in detail in determining a fair rate of return. He also analyzes the 


standards of a fair return from both an economic and a legal stand- 
point, finding a "compelling similarity." He says that, in economic 
terms, the fair return to any company is what its assets could earn 
if employed in other enterprises of corresponding risk and hazards. 
The cost of capital to A.T.&T. is therefore an "opportunity cost;" it 
is measured by returns in other uses. He also points out that in a 
period of inflation a stable nominal dividend is a declining real divi- 
dend; he attributes A.T.&T.'s failure to move with the market largely 
to regulatory lag, a hazard of regulation in an increasing cost industry 
during a period of inflation. On the composition of a fair rate of return 
he says it is composed of pure interest (time value of money) plus 
compensation for risk and uncertainty. Based on his detailed analysis, 
he concludes that the fair rate of return on A.T.&T. equity is 10% 
on an original cost net investment rate base, with fluctuations in the 
return of about one-half a percentage point up or down as the zone of 
reasonableness. He further concludes that the overall fair rate of return 
to A.T.&T. is 8%, which he conceives to be a target rate around which 
the actual rate may fluctuate about a half a point in either direction. 
This figure is derived by using a cost of 3.95% for the debt component 
of total capitalization of one-third totaling 1.3% and a rate of 10% for 
the equity component of two-thirds of total capitalization, totaling 
6.7%. The two combined equal 8%. 

Bell Exhibit 18 — Dr. I. Friend, professor of Economics and 
Finance, University of Pennsylvania, presents evidence to determine 
the expected return on the market price of A.T.&T. stock required 
to induce investors to purchase it. He estimates this "cost of equity 
capital" to be between 8.0% and 9.0%. However, he points out that 
although the cost of capital is obviously a relevant consideration in 
arriving at a fair return, it cannot be applied directly to book invest- 
ment. He also points out that in his opinion "a comparable earnings 
standard is more relevant than the cost of capital to the determination 
of a fair rate of return for regulated industries . . . ." 

Bell Exhibit 19— Albert J. Bergfeld, president. Case and Com- 
pany, discusses operating risks of the Bell System, electric utilities 
and the non-regulated manufacturing industry. It would appear, 
he concludes, that electric utilities generally show lower operating 
risks than the Bell System. Manufacturing, on the other hand, shows 
mixed tendencies, with high and low risk indications, so that no clear- 
cut conclusion is possible that manufacturing faces higher or lower 
operating risks than the Bell System. Both manufacturing and the 
Bell System face very sizable, though different, operating risks. 

Bell Exhibit 20 — John J. Scanlon, vice president and treasurer, 
A.T.&T., stresses several points: in the interests of customers, 
employees and shareowners, Bell System earnings should be reason- 
ably comparable with those available on alternative investment oppor- 
tunities; the Bell System is not seeking a general increase in its rates 



to improve earnings; it aims to improve earnings through increased 
operating efficiencies. He emphasizes that the comparable earnings 
approach recognizes the reahties of the capital market and the variety 
of investment opportunities offered there, and that the fair rate of 
return for a regulated business should be a range, "a zone of reasonable 
earnings," within which it might be allowed to operate without regula- 
tory intervention. He concludes that the Bell System under today's 
conditions should be allowed to earn in a range of 71/2% to 8i/2% on 
its total capital. However, he notes, this has been conservatively de- 
termined and, in the light of forces prospectively operative, a somewhat 
higher range may well be required to assure the continued investor 
support required to finance the substantial growth which appears likely 
in the years ahead. He also provides statistics to show that the range 
of 71/2% to 81/2% is just sufficient to restore the Bell System's long 
term earnings relationships with unregulated industries and that 8V2% 
would be required to restore a relationship to the 50 largest manufac- 
turing companies generally similar to that obtaining in prewar years. 

■■^^^^^■■^^^■■^^■■■^^■^^ MAY 31 

Filing of A.T.&T. direct testimony on overall Bell 
System policy, economic changes and ratemaking 
principles, and supplemental testimony on operat- 
ing results 

Bell Exhibit lA — Knut Sandbeck, general accountant, A.T.&T., 
gives supplemental testimony, furnished at the request of the F.C.C., 
showing that the earnings ratio, based on net operating earnings 
and average net investment as recorded for interstate and foreign 
operations for the period November, 1965 through April, 1966 was 
7.74% on an annualized basis, and that when the results for this period 
are adjusted for known changes in wage levels, taxes and other factors 
affecting the period, the earnings ratio on an annuaUzed basis becomes 
7.78% — a figure beUeved to be reasonably representative of the Bell 
System "going level" of earnings. 

Bell Exhibit 21 — W. O. Baker, vice president for research. Bell 
Telephone Laboratories, emphasizes that the long-run benefits to 
the public of Bell System research and development can be realized 
only through the dedication of substantial resources. The necessarily 
quick and decisive commitment of funds entails unavoidable risk, 
which regulation must take into account. He makes the point that the 
Bell System's constant research and development efforts have pro- 
vided a reliable and sophisticated communications network and have 
benefitted other industries. He stresses that, in order to meet future 


communications needs, the Bell System must maintain its business 
vitality and make the latest technology available to its customers. He 
says that to bring the benefits of new technology to meet the customers' 
needs requires the commitments of large amounts of capital, and that 
"the benefits which new technology promises to society are great 
enough to justify devoting sufficient resources to the task." 

Bell Exhibit 22 — Alexander Sachs, economic consultant to a 
number of industrial, insurance and investment companies and 
formerly consultant to the Roosevelt administration, underscores fim- 
damental economic and political changes: the national concern with 
economic growth and welfare in the postwar period; the support for 
our advanced industrial economy coming from technological progress; 
and the great growth and increased professionahsm in the community 
of investors. He points out that these changes require new attitudes by 
regulatory bodies to permit regulated industries to fulfill their mission 
in our growth economy and society, that the Bell System has made 
outstanding contributions to economic growth and must make further 
progress, and that flexibility in outlook and a broader viewpoint are 
needed in regulation. 

Bell Exhibit 23— Gordon N. Thayer, vice president-plairning, 
A.T.&T., emphasizes several points, among them that the objec- 
tives of the Bell System's rate structure are to achieve its overall 
revenue requirement, to meet customer needs, to promote greater use 
of its service and to encourage more efficient use of its plant. He 
stresses that there are a number of significant ratemaking principles 
and factors, of which cost is only one, which must be considered in 
setting or evaluating rates. He points out that the Bell System in- 
tends that the revenues from each service cover the full additional 
costs incurred in furnishing that service, including return on the related 
investment, and in addition make a contribution to coverage of com- 
mon costs. By designing rates so that each category of service, other 
than message toll telephone service (and WATS), makes as large a 
contribution as feasible to the overall interstate earnings requirement 
of the business, it is possible to have lower rates for the basic message 
toll service. He emphasizes that, in considering costs as one of the 
appropriate factors in determining rates for particular services, the 
relevant costs are the "additional" costs for which that service is re- 
sponsible. And he stresses that experience and judgement play a major 
part in the development and design of rates; the ratemaking function 
cannot possibly be reduced to the use of some mathematical formula 
— flexibiUty is required. (He also presents proposals for revised rates 
for private line telegraph service, to be effective at the close of phase 
one and subject to intervening events.) 

Bell Exhibit 24— Albert M. Froggatt, vice president, A.T.&T., 
reviews various problems involved in the determination of costs for 
the several categories of interstate service and describes the general 



principles and concepts being followed in analyzing the costs for the 
purposes of the F.C.C. investigation. He stresses two points in par- 
ticular: a full allocation of embedded costs such as was made in the 
seven-way cost study does not provide the proper basis on which to 
appraise the interstate rate structure; the cost information needed to 
appraise or determine rates for a particular service category should be 
based primarily on costs currently and prospectively attributable to the 
furnishing of the particular service category. 

Bell Exhibit 25— Dr. James C. Bonbright, professor emeritus of 
Finance in the Graduate Business School, Columbia University, 
discusses the role of costs in the determination of reasonable public 
utility rates. He stresses that the costs of greatest significance in the 
determination of rates for specific services are incremental costs — not 
fully distributed total costs. He says total cost distributions are arbi- 
trary, in that they assign to specific classes of services common or joint 
costs that cannot be allocated on a cost responsibility basis. He con- 
cludes that "it would be little short of a catastrophe for the cause of the 
sound development of telecommunications in this country if a per- 
sistent and unyielding attempt were made to impose upon the Bell 
System an obligation to bring the revenues from each of its major 
classes of service into alignment with costs imputed to each class by 
any kind of a total-cost allocation." 

Bell Exhibit 26— Dr. William J. Baumol, professor of Economics, 
Princeton University, directs his testimony to the fundamental prin- 
ciples involved in determining appropriate rate levels for the major 
classes of Bell System services. He stresses that market demand must 
be considered along with costs in setting rates, that it is the costs 
directly incurred in the provision of a service which are pertinent for 
the determination of its price, and that there is general agreement 
among economists concerning this role of cost in pricing. He points out 
that, while total costs must be recovered by a business, any attempt 
to divide all the costs among the different services must necessarily 
be arbitrary and can lead to pricing decisions harmful to the firm 
and to consumers. He also points out that arbitrary measures are 
implicit in the seven-way cost study. He concludes that no cost cri- 
terion, particularly fully allocated cost, can indicate by itself whether 
a given pricing proposal is in the public interest, and above all there 
is the danger, as with any price support device, that fully allocated 
cost pricing will prove inimical to the interests of consumers. 

Bell Exhibit 27 — Charles H. Frazier, independent public utility 
consultant associated with National Economic Research Associates, 
Inc., deals with ratemaking developments in the regulated gas and 
electric industries. These firms attempt to set rates for different 
customers and service classes that will enable them to meet competi- 
tion, tap their markets to the maximum degree and reduce the portion 



of their fixed common costs which would otherwise be borne by core 
or base load customers. He illustrates how the ratemaking philosophy 
developed in the gas and electric industries over several decades has 
been largely responsible for the growth and success of those industries 
and has enabled them to provide improved service at lower real cost 
to the user. 

Bell Exhibit 28 — Dr. Merrill J. Roberts, professor of Transpor- 
tation and director of the Business Research Center, Graduate School 
of Business and professor of Economics in the Division of the Social 
Sciences, University of Pittsburgh, analyzes the role of costs in the 
regulation of pricing in the surface transportation industry. He shows 
that the Interstate Commerce Commission has not rigidly adhered 
to the use of any particular type of cost formula in ratemaking but 
has been flexible in its sanction of both incremental and fully dis- 
tributed costs, depending on the situation. He notes that, as an 
economist, he believes that it is a mistake to rely on fully distributed 
measures to identify the low cost carrier and to establish rate floors, 
and he quotes from The Economic Report of the President, January 
1966, to show that his view is shared by the President's Council of 
Economic Advisors in their evaluation of surface transportation 
regulatory policy. 

Bell Exhibit 29— Dr. Franz B. Wolf, vice president, Robert R. 
Nathan Associates, Inc., deals with air transport pricing practices 
and rate regulation principles as well as with the general economic 
structure and dynamics of the air transport industry. After pointing 
out the specific characteristics which make the air transport industry dif- 
ferent from many regulated industries, he proceeds to show how the Civil 
Aeronautics Board has, nevertheless, acknowledged the public interest 
and the interest of the carriers in attaining fuller employment of avail- 
able capacity and more rapid expansion of the market by offering serv- 
ice at rates above added cost though below fully allocated cost. He also 
points out that the Board has frequently expressed a view closely simi- 
lar to that prevailing among economists: that sale of an additional 
output of a product or service at value-of-service price above incre- 
mental cost is desirable, regardless of fully allocated cost. 

Bel! Exhibit 30— Albert J. Bergfeld, president. Case and Com- 
pany, notes that in his experience in the consulting profession he 
has observed a clearly discernable trend among industrial business 
enterprises toward placing greater reliance upon the use of incremental 
cost principles in analyzing the profit consequences of management 
decisions including pricing. He says that the management of such firms 
has generally concluded that historical costs are irrelevant in decisions 
such as pricing that involve future events, and that they have recog- 
nized a need for a system of costs that is predictive and that truly 
reflects the behavior of cost, revenue and profit as demand and price 
vary. He reports on a survey of leading businesses made by his firm 


which documents this trend and adds that the experience of his firm's 
practice since this survey also confirms this view. 

Bell Exhibit 31 — Ben S. Gilmer, executive vice president, 
A.T.&T., provides the backdrop for all Bell System testimony by 
dealing with the System's fundamental objective of service to the 
public. He stresses that the System's responsibilities to employees and 
shareowners, basic organizational structure, and policies of research 
and development, marketing and pricing all support the fundamental 
service objective. This service objective is also the basis for the posi- 
tion the Bell System takes on the issues in the investigation, he empha- 
sizes. He states: "We do not look to regulation to protect us from risk 
or assure our earnings for us. We have worked to improve our earnings 
level and intend to keep on doing so. All we ask is the continued 
incentive that derives from the opportunity to share in the benefits of 
our own initiatives." He underscores that innovation depends on the 
aims of people and organizations and on the freedom and incentive to 
pursue those aims, and that good earnings are essential if Bell System 
innovation is to continue to serve the public interest in the demanding 
period ahead: "Earnings prospects that encourage a commitment to 
the future will help assure continued leadership in the technology of 
common carrier communications." 


Oral testimony by Bell System witnesses. F. Mark Garlinghouse, 
vice president, A.T.&T., and attorney for Bell System respondents 
introduced witnesses after presenting an opening statement outlining 
the issues as the Bell System sees them in phase one and briefly stating 
the System's position on them. Witnesses were Ben S. Gilmer, W. O. 
Baker, Dr. Paul W. McCracken, Charles W. Buek, Robert R. Nathan. 


Further oral testimony by Bell System witnesses: F. J. McDiarmid, 
Gustave Lehman Levy, Adrian M. Massie, Dr. I. Friend, Alexander 
Sachs, Dr. Walter A. Morton. 


Final oral testimony on overall policy and rate of return; witnesses 
were John J. Scanlon and John H. Moller. 

JULY 18 

Start of cross-examination of Bell System rate of return witnesses; 
the Commission has stated that it expects it to be completed by 


(The following schedule is subject to change.) 

^^^^m^^mmmamm^mm^amm^mi^^^^^ JULY 29 

Bell System to file additional testimony on ratemaking principles 
and factors. 


Testimony of witnesses of all other parties on rate of return to be 
filed. (Written summaries of any testimony to be presented orally 
must be filed by this date.) 

Bell System to file testimony justifying inclusion in rate base of 
plant under construction, cash working capital, and materials and 

SEPT. 23 

All other parties to give notification of the names of their wit- 
nesses and subject matter of their testimony with respect to any Bell 
System testimony filed since May 31 (except as to ratemaking princi- 
ples and factors ) . 

SEPT. 26 

Cross-examination to begin of Bell System witnesses on plant 
under construction, cash working capital, and materials and supplies, 
and any other Bell System witnesses who may not have been reached 
for cross-examination at the hearing beginning July 18 (other than 
witnesses on ratemaking principles and factors). 

OCT. 10 

Cross-examination to begin of witnesses of other parties on rate 
of return. 

OCT. 17 

All other parties to file their testimony on net investment, operat- 
ing results, and any other issue (except ratemaking principles and 
factors) in phase one not theretofore dealt with. 

NOV. 7 

Cross-examination to begin of witnesses of other parties on evi- 
dence submitted as provided above. 

(No schedule has yet been set for cross-examination of Bell System 
witnesses on ratemaking principles and factors or for the filing of 
testimony of other parties on this subject.) 

Note: Expanded summaries of Bell Exhibits 10 through 31 are available. 


Photographed by weather satellites 
and sped to meteorologists via 
specially engineered Bell System facilities, 
these pictures of world-wide 
cloud formations are . . . 

taking the 'whether' 

out of WEATHER 

Camera-carrying weather watching 
satellites are giving the Environment- 
al Science Services Administration 
(ESSA) an invaluable new tool for 
weather analysis and forecasting. Since 
last February, two satellites have made 
it possible for forecasters to have a 
complete photographic look once every 
24 hours at cloud formations surround- 
ing the earth. The satellites transmit 
the cloud photographs to tracking sta- 
tions in Alaska and Virginia. The cloud 
pictures give weather experts a much 
faster and much more complete view 
of the world's weather than they have 
ever had before. 

From the tracking stations, the 
picture and control signals are sent 
to ESSA's National Environmental 
Satellite Center (NESC) in Suitland, 
Md. for processing and analysis. From 
Alaska to Suitland, signals are sent 
over one of the longest microwave sys- 
tems in the world. To assure clear 
transmission of the pictures over this 
great distance, the Bell System com- 
pleted an overall systems engineering 
job for ESSA and set up specially en- 
gineered terminals at Gilmore Creek, 
Alaska; Suitland, Maryland and other 
locations where the signals are trans- 
mitted or received. In the continental 
U.S. the Bell System provides a wide- 
band channel which simultaneously 
handles Teletype, voice, data and pic- 
ture signals. 

Weather satellite is rea< 
for launching. At Cape H 
nedy rockets are contro i 
by guidance system de 
oped by Bell Laborato 


7' above the earth, a rotating weather satellite photographs cloud formations 

the world in segments 1,700 miles square using TV-type camera as shown in artist's 

tion (left); signals representing each picture are later sent to ground tracking 

in Virginia (center) or Alaska, then fed over the ground communications 

to meteorologists at the National Environmental Satellite Center in Maryland. 

lality of transmission Is being checked in a Long Lines test room (upper right) 

i photomosaic was assembled from 450 Individual pictures taken by Tiros weather satellite 
1 24hour period In February, 1965. Brightest features on photographs are clouds which are 
i/fd at National Environmental Satellite Center to provide world-wide information on weather. 


taking the 'Whether' 
out 01 WEATHER 

Transmission of weather pictures from space is triggered by tech- 
nician at Gilmore Creek, Alaska. Signals from the ground turn on 
tape recorder in weather satellite, which will send signals represent- 
ing cloud photographs taken during one orbit of earth by satellite. 

Data received from weather satellites at the tracking station in 
Alaska is transmitted via one of world's longest microwave systems 
extending from Gilmore Creek across Canada and continental U. S. 
to National Environmental Satellite Center, Suitland, Md. Signals 
are also received at Goddard Space Flight Center, Greenbelt, Md. 
and at Strategic Air Command Headquarters In Omaha, Neb. 


Distribution panel represents 
demarcation between Bell Sys- 
tem transmission facilities and 
equipment of National En- 
vironmental Satellite Center. 

At NESC Headquarters in Suit- 
land, Md., microwave signals 
transmitted over Bell System 
equipment are reconverted 
into television-type pictures 
and photographed. Prints then 
are pieced together into a 
mosaic of the world's weather. 

Individual cloud photos are 
analyzed by weather experts 
at NESC. From these prints, 
a cloud map is prepared. The 
cloud pictures and map are 
turned over to the Weather 
Bureau for use by meteorolo- 
gists in preparing weather 
maps and forecasts to be sent 
all over the U. S. by facsimile 
via Bell System ground lines. 


taKing the 'Whether 


A master cloud-map — Nephanalysis — is 
prepared by weather chartist from infor- 
mation tai<en from photographs made by 
weather satellite less than hour earlier. 
High speed Bell System communications 
facilitate up-totheminute forecasting. 

Weather data prepared by in- 
terpreting cloud photos snap- 
ped by orbiting satellite is 
distributed on Weather Bu 
reau's facsimile transmission 
network to all map users. 

Meteorologists at National En- 
vironmental Satellite Center 
hold daily critique of informa- 
tion on weather maps pre- 
pared from cloud photographs 
taken by the ESSA satellite. 


Enlarged photo of an Indian 
Ocean storm was made from 
print on film strip held by 
Laura Walters of NESC. The 
film strip was received from 
satellite of Environmental Sci- 
ence Services Administration. 
Such film strips are archived 
for use in future research. 

Alfonso Butera of NESC checks 
out teletypewriter equipment 
at Suitland, Md., with Donald 
Posey of Chesapeake and Po- 
tomac Tel. Co. Plant. The Bell 
System's teletypewriter net- 
work ties together the various 
stations of ESSA, ranging from 
points in Virginia to Alaska. 


taking the 'Whether' 

out of WEATHER 

Microwave tower located in Suit- 
land is at the eastern terminus 
of circuits to the satellite tracking 
stations in Alaska and Virginia. 


tun 1 






UKkl NOOe Tl 
.~..».cnT OF Pi 

Paul IVIcGrath, Chesapeake & Potomac Tel. Co. Marketing, 
discusses the communications system for the Tiros Opera- 
tional System (TOS) with NESC employee so that he will 
be able to anticipate future communications requirements. 


Henry Kahl, left, Bell Telephone Laboratories' systems engineer for the weather satel- 
lite project, and Douglas Pew, Long Lines engineer, make facility tests at Suitland. 
Both have key roles in the project. Heart of the communications system at TOS 
Operations Center is the switching system consolette (right). All voice communication 
Is controlled by attendant using pushbutton cordless set tailored to customer's needs. 

in this central office at Suitland, 
C. & P. Tel. Co. Plant men are 
on 24-hour duty to insure con- 
tinuous quality performance of 
nrc/^ """munications system. 

ird Hach, A. T. &T. Long Linss sales representative, discusses 
:e with Robert Laudrille, NESC ground communications 
rvisor, to be sure facilities meet NESC present and future 
rements. In foreground is a half-size scale model of the ESSA 
ler satellite, which permits working parts to be viewed. 

As guests of AT&T, delegates from 24 countries 

weighed worldwide telecommunications problems 

amid all the trappings of an international conference 



The headquarters of A.T.&T.'s Long Lines Department — which, 
among other things, handles overseas telephone service — normally has a 
somewhat international flavor. From April 14 to May 6, however, the 
main floor took on a greatly heightened global aura as 100 delegates from 
24 countries met to discuss international telecommunications problems. 
They were members of three Study Groups of the International Telegraph 
and Telephone Consultative Committee (CCITT), one of the permanent 
organizations of the International Telecommunications Union which, in 
turn, is the UN specialized agency dealing with telecommunications. The 
Study Groups to which A.T.&T. was acting as host were considering, 
successively, the characteristics of signaling and switching systems for 
communications throughout the world using either cable or satellite cir- 
cuits; quality of service, signaling requirements and worldwide numbering 
and routing plans; and coordination of the work of other study groups on 
questions affecting the worldwide operator dialing and customer dialing 
networks. The chairman of the last group was Edwin C. Laird, of the 
Long Lines Department; delegations comprised of representatives from 
A.T.&T., Long Lines and Bell Telephone Laboratories attended all of 
the sessions. 

The auditorium of the Long Lines building, at left center, was trans- 
formed into a meeting room that rather looked as though it belonged in 
the UN or Geneva, replete with translation booths (providing simul- 
taneous translation into English, French and Russian) and crowded with 
busy delegates clustered around signs identifying their countries, upper 
right. A number of U.S. firms, upper left, were also represented. The 
working documents of the meetings lined the back of the room, lower 
right, and were frequently changed as different topics came up for dis- 
cussion. And finally, lower left, as with most such conferences, the dele- 
gates took many opportunities to get together for informal and often 
intent discussion of their problems and questions. 


Overseas By Dial 

BTL and DNA 


Copper Rod 

Laser Surgery 

Undersea Cable 

Standard Tones 

Direct Dialed Overseas Call 

g A telephone call between Philadelphia 
and Geneva on June 15 marked the 
first time in telecommunications history that 
a telephone in Europe was dialed directly 
from a telephone in the United States. 

Lowell F. Wingert, vice president of A.T.&T.'s 
Long Lines Department placed the call to 
Jean Rouviere, director of the International 
Telegraph and Telephone Consultative Com- 
mittee (CCITT) in Switzerland. The call high- 
lighted a talk Mr. Wingert gave before an 
international conference of the Institute of 
Electrical and Electronics Engineers (IEEE). 
While U.S. telephone subscribers may now 
dial directly to telephones in Canada, they 
must go through either an overseas or long 
distance operator to call other points outside 
the country. 

In his remarks at the conference, Mr. Win- 
gert said that the Bell System is planning 
to talk with overseas telephone administra- 
tions regarding the possibility of a limited 
trial of overseas customer dialing next year 
between selected central offices in New York 
and several European cities. He said the 
timetable calls for introducing the service 
"on a gradual basis" beginning in 1970. 

However, Mr. Wingert stressed that its ex- 
tension to all U.S. telephones will require 
several years. Modifications requiring "a sub- 
stantial investment of money" will have to 
be made in switching and automatic account- 
ing equipment in the country's long distance 
telephone offices. 

Mr. Wingert told how international cooper- 
ation — as reflected in the work of the CCITT 
(see p. 56) — is paving the way for global 
telephone dialing. He said agreement has 
been reached on international switching ar- 
rangements, techniques for language assist- 
ance and a worldwide routing and telephone 
numbering plan. 

The numbering plan divides the world into 
nine numbering zones and assigns code num- 
bers to countries within each zone. The plan 
envisions a maximum of 12 digits for a world 
telephone number plus a special overseas 
access code. 

Conversion of the world's telephone sys- 




To facilitate worldwide dialing, areas of globe have been given numerical designations, as 
shown at left. At right, a quick look at differences in some telephone dials reveals one 
compelling reason for conversion of the world's telephone systems to oil-number calling. 

terns to all-number calling will be a major 
step toward global customer dialing, Mr. 
Wingert said. "One compelling reason for 
this in the United States is growth because 
the use of numerals provides far more pos- 
sible number combinations. But another 
basic reason is to achieve uniformity among 
the telephone systems of the world." 

Citing differences in equipment, Mr. Win- 
gert said: "In the United States, we use a 
dial with 24 Roman letters. We would have 
trouble in calling from Philadelphia to Mos- 
cow and dialing an exchange prefix with 
Cyrillic letters . . . and vice versa. And how 
would the Danes, who have no 'W' on their 
dials, manage to call a WAInut exchange 
number here?" 

Nonetheless, Mr. Wingert said, telephone 
people of many nations are striving to solve 
these and other problems. Their efforts are 
being made against a backdrop of continuing 
growth in the number of telephones in the 
world and in the volume of overseas calling. 

The world's telephones are expected to 
increase from 195 million today to 500 mil- 
lion by 1980. Overseas calls to and from 
the U.S. are expected to grow from eight 
million in 1965 to 90 million by 1980. 

"Looking to the future, we see a constantly 
expanding need for more and better (com 
munications) satellites as well as more and 
better cables and other facilities," Mr. Win- 
gert said. 

The demonstration call to Geneva was 
made — coincidentally — almost 90 years from 
the day Alexander Graham Bell came to Phila- 
delphia to show his new invention, the tele- 
phone, at the 1876 Centennial Exposition. 

Bell Labs Studies DNA Molecule 

■I The molecule which carries genetic in- 
formation needed to reproduce living 
creatures — from bacteria to human beings — 
is the polymer deoxyribonucleic acid (DNA). 
The efficiency and accuracy with which vast 
amounts of information are stored in, read 
out of, and copied by DNA molecules are 
unmatched and make the most sophisticated 
computers appear like the crudest toys. 

Scientists at Bell Laboratories are engaged 
in detailed physical and chemical studies of 
these amazing molecules. They are seeking 
to learn all they can about how the biologi- 
cal molecules store and transmit information; 


R. G. Shulman (left) and J. Eisini;cr oj Bell Laboratories discuss experiment designed to 
investigate excited electronic states of DNA. Model of DNA molecule appears at jar left. 

such knowledge may one day be useful to 
engineers trying to Improve our man-made 
communications system. 

The DNA molecule uses a "language" 
made up of a sequential arrangement of four 
different base compounds. A single "word" 
in the DNA language consists of three con- 
secutive bases. When one of these base 
compounds in the molecule is altered or 
eliminated or inserted, the genetic message 
is changed and a biological mutation results. 
This mutation may be inconsequental, bene- 
ficial, harmful or lethal to the living cell. It 
may occur spontaneously, by chemical in- 
teraction involving the DNA or by radiation 
damage to the DNA. 

Bell Laboratories scientists have concen- 
trated their studies on the detailed properties 
of DNA molecules as they exist in the mo- 
ment after DNA has absorbed radiation and 
before permanent damage has occurred. As 
a result of these specialized studies, a new 
understanding of the electronic properties 
has been obtained. This research provides a 
molecular model for early stages of radiation 
damage in DNA and may contribute to a 
better understanding of these molecules as 
they exist under normal conditions in the cell. 

NORAD/ADC Communications ' 

M The North American Air Defense Com- 
mand has over the past few months 
begun operations in its new hardened Com- 
bat Operations Center deep inside Cheyenne 
Mountain near Colorado Springs, Colorado, 
culminating in the cutover of a new 4-wire 
#1 Electronic Switching System on July 1, 
1966. The Bell System worked closely with 
NORAD/ADC for several years in planning 
and installing a survivable communications 
system both internal and external to the 
Cheyenne Mountain Complex (CMC) (see 
BTM, Summer 1965). 

The internal communications package, pro- 
vided by the Mountain States Telephone and 
Telegraph Company, includes the new 1,000 
line 4-wire #1 ESS programed for NORAD/ 
ADC's special operational requirements. In 
this capacity it will serve as a large dial 
PBX with full capability of accomplishing a 
wide variety of switching functions. The ESS 
automatically recognizes certain (ultimately 
all) priority NORAD/ADC calls and puts them 
through regardless of lines in use. It offers 
preset (hot line) and abbreviated dialing, 
conference arrangements, Touch-Tone*' call- 


ing, transfer of calls, and message recording 
and playback sen/ice. Early reports Indicate 
that NORAD/ADC is well pleased with the 
system and its special features. 

The external communications for the com- 
plex, provided by the Long Lines Department 
of A.T.&T., consist of six routes or "spokes" 
(four hardened cable and two microwave) 
radiating out from the CMC and connecting 
to a crescent-shaped communications ring 
which surrounds three sides of the mountain. 
The ring, in turn, connects to all the major 
Bell System communications routes, includ- 
ing the transcontinental hardened cable. Any 
one "spoke" has the capacity to carry the 
entire communications requirements. 

Bell Telephone Laboratories engineers de- 
signed a special matrix switch for automatic 
switching between spokes if a working spoke 
fails. They also designed a hardened micro- 
wave antenna, with a foundation embedded 
in the mountain, for each of the two micro- 
wave routes. Buildings housing the equip- 
ment in the CMC are shock mounted, and 
the communications systems are designed to 
survive electromagnetic radiation from a 
nuclear blast. 

Short Cut Copper Rod 

IIH Copper rod — basic to the production of 
telephone wire — is being formed directly 
from scrap copper for the first time, in a 
new continuous process now being used by 
the Bell System. 

The casting and rolling operation elimi- 
nates the need to convert molten copper into 
ingots and to reheat them for subsequent 
rolling. It will substantially reduce the cost 
of producing rod. 

The process is under way at the Nassau 
Smelting and Refining Company — a subsidi- 
ary of Western Electric — which specializes in 
reclaiming metals from worn-out telephone 
equipment. When the new process is in full 
operation it will produce about one-fifth of 
the Bell System's current requirements for 
copper rod. 

Until now continuous casting and rolling 
of rod was possible only with metals of 

relatively low melting temperatures. For 
more than a year Western Electric engineers 
have worked to adapt to copper a process 
developed in Italy that has been success- 
fully used for making aluminum rod. 

The process starts in a large gas furnace, 
where up to 75 tons of copper scrap are 
melted and refined. When ready, the molten 
copper is poured in a continuous stream into 
an electrically heated holding furnace. Then, 
at a carefully regulated rate, it flows into a 
grooved molding wheel and is retained by 
a rotating steel belt. While in the groove, the 
moving metal is water-cooled until solidified 
into a continuous red-hot bar about two 
inches thick. 

Leaving the wheel, the copper is carried 
along a short conveyor and passed through 
14 closely-aligned steel rollers. In this rolling 
mill, the bar is further cooled and drawn into 
rod about one-quarter inch thick. It runs off 
the machine and is coiled into large, circu- 
lar collecting bins. The casting and rolling 
process is controlled from a console by a 
single operator. 

Hot copper rod moves around wheel in new 
continuous casting and rolling operation. 

Argon laser used in bloodless surgery was 
developed, above, at Bell Laboratories. 

Bloodless Surgery 
By Argon Laser 

^ Doctors at the Laser Laboratory of the 
University of Cincinnati Medical Center 
and The Children's Hospital Research Found- 
ation have successfully used a continuously 
operating argon laser as a "light" knife in 
performing bloodless surgery on cancerous 
tumors, and on a tattoo. The type of laser 
used was developed in the Optical Device 
Department at Bell Telephone Laboratories. 

One of the most promising aspects of laser 
surgery is the fact that the argon laser caut- 
erizes the wound as it cuts. This prevents 
loss of blood which can be of serious concern 
when an operation is performed near vital or- 
gans and when there is fear of contamination 
from diseased growth to surrounding tissue. 
The argon laser is especially well suited to 
this new application because of its rela- 
tively high continuous power output (up to 4 
watts), and because its bluish-green beam is 
readily absorbed by body tissue. 

The director and surgeons from The Chil- 
dren's Hospital Research Foundation Laser 
Laboratory expressed a need for a technique 
of positioning the laser beam. The problem 
was solved by Bell Laboratories scientists 
who devised a positioning scheme using a 
gimbal-mounted spherical mirror that allows 
the focused beam to be moved through a 
large angular field. 

Transistorized Undersea Cable 

Bl Details of a new transistorized under 
sea telephone cable system that car 
carry nearly six times as many two-way con 
versations as any existing submarine cabk 
system have been revealed by Bell Telephone 
Laboratories. For the first time, transistoi 
amplifiers are used in the repeaters, the de 
vices inserted in the cable at specific inter 
vals to boost the strength of telephone sig 
nals. The system has 720 two way voice 
channels in a single cable, compared to 128 
such circuits in the last previous system. 

Existing submarine cable systems use 
vacuum tube amplifiers to boost signals as 
they pass through the repeaters. The tran- 
sistors used in the new system's repeaters 
offer a number of advantages, including 
broader frequency bandwidth which permits 
greater voice-channel capacity and reduced 
power requirements. They are also expected 
to enhance an already excellent record of re- 
liability and long life for submarine telephone 
cable systems. (There have never been any 
component failures on any of the existing 
four transatlantic cables.) The special, ex- 
tremely high reliability transistors used in 
the new repeaters were developed by Bell 
Laboratories and manufactured by Western 
Electric. The repeaters on the new system 
must be spaced every ten nautical miles 
instead of every 20 nautical miles as on 
present systems. 

The new cable system can operate over 
distances up to 4,000 nautical miles and in 
depths of four nautical miles. Like other 
recent systems, it will use a coaxial cable. 
Cable diameter is one-half inch greater than 
previous systems. 

Single Quartz Wafer Does 
Eight Components' Work 

H A single wafer of quartz — a crystalline 
material used widely in making elec- 
tronic components for communications sys- 
tems — is now performing a complex function 
of frequency selection which previously re- 
quired eight electronic components. 


Developed at Bell Telephone Laboratories, 
18 new device — a four-tenths of an inch cir- 
ular wafer of quartz with gold electrodes — 
lan be fabricated for use in many phases of 
adio, narrowband FM and voice frequency 
i-ansmission. The device is mounted in a 
(eremetically sealed cylinder. 
, A variety of applications may exist for the 
■ew filter in telephone carrier systems. These 
pplications would include tone selection, 
ihannel, pilot and carrier supply filters. The 
irst use of this filter will be as a single 
Irequency selector in the Bell System's new 
4 Coaxial Cable System, now undergoing 
I eld trials. 

ptandard Telephone Tones 

:■ Telephone signals for ringing, busy and 
dial differ slightly in various parts of 
he Bell System, but standardized signals 
lave now been devised so that, in the future, 
lelephone users will feel at home with the 
ounds regardless of where they are located. 
: Already, a vanguard of these sounds — the 
■oft hum of the Touch-Tone® calling dial 
lone — is being introduced in various parts 
if the System. All of the new signals will be 
reated from four pure tones with frequencies 
letween 350 and 620 cycles per second. 
Vhen generated in pairs they become the 
hree basic signals of the telephone central 
iffice: ringing, busy and dial tone. 

Except for dial tone, which is easily dis- 
linguished from the old one, the paired tones 
)roduce a signal similar to the single modu- 
ated tone signals now in general use. In 
•ome areas, however, tone differences will be 
)erceptibly greater, depending upon the ex- 
ent the new tones deviate from the old. 

The complete range of new tones was first 
ntroduced in the electronic central offices 
it Succasunna, N.J. and Chase, Md. 

The new tones make up what is called the 
'Precise Tone Plan," the Bell System's blue- 
)rint for standardizing audible telephone 
•ignals. Still in its infancy, the program will 
le made availabe to the Associated Com- 
janles over a period of years. 

The ringing and tone equipment produc- 
ing the precision signals were originally de- 
signed for electronic systems, but Bell Lab- 
oratories and Western Electric are now work- 
ing on ways to adapt it for electro-mechani- 
cal central offices. 

Tenth Anniversary 
For Visit Program 

■ The Bell System's Share Owner-Man- 
agement Visit program marked Its tenth 
year of operation this year. Over the last 
decade it has grown to the point where there 
are now about 10,000 employees participat- 
ing, and, across the nation, over half a mil- 
lion share owners have been visited. 

The program came Into being In order to 
make A.T.&T. share owners feel more a part 
of the business. 

Although they can go to annual meetings, 
correspond with A.T.&T., read annual reports 
and quarterly dividend statements, or attend 
open houses, the Information obtained 
through these sources Is sometimes limited. 
What is lacking, of course. Is the opportunity 
for full two-way communications. It was to 
overcome this limitation that the Share 
Owner-Management Visit program was In- 

Last year about 100,000 share owners 
were visited by management people in their 
homes and offices. During the discussions 
questions about earnings, growth, construc- 
tion, regulation and the long-term prospects 
of the business were brought up — and 
answered as completely as possible. 

To help them answer the questions, partici- 
pants In the program first attend a three to 
four-day workshop during which they get 
background about the business and advice 
on handling share owner visits. 

The share owner is not the only one to 
benefit from the program. The visits help the 
Bell System learn more about the kind of 
information share owners want. And the men 
and women who make the visits benefit be- 
cause they broaden their own knowledge of 
the basic Issues of the business. 


Electronic Expressway 

M The highway of tomorrow is just a few 
minute's drive outside downtown Chi- 
cago, where traffic on a six-mile stretch of the 
heavily traveled Eisenhower Expressway is be- 
ing electronically controlled. 

Until recently bumper-to-bumper traffic 
jams formed on this particular stretch of 
expressway during the evening rush hour. 
Now, as a result of electronic controls linked 
to computers by telephone circuits, rush- 
hour drivers can drive at a comfortable speed. 

This boon to commuters has been created 
as a "live traffic laboratory" by engineers 
who are studying the causes of traffic con- 
gestion and investigating ways to improve 
traffic flow. The project is being financed 
jointly by Federal, State, Cook County and 
Chicago funds. 

The effect of this experimental system on 

expressway and surface street traffic will hel| 
determine the extent to which traffic conges 
tion problems can be lessened by electronii 
controls. By locating critical points and de 
termining the causes of congestion, the sys 
tern is also providing valuable informatiot 
for highway planners. In addition, this sys 
tem may be contributing to a reduced acci 
dent rate in the experimental section. 

The control system consists of traffic de 
tectors on the expressway and its ramps 
connected by 35 telephone circuits to analog 
computers and various recording devices a1 
a central office. The computers process date 
from the detectors into traffic volumes 
speeds and densities for a comprehensive 
analysis of expressway operations. 

The actual control of traffic is accomplished 
by adjusting entry to the expressway by 
means of signal lights on the ramps. The 
signal lights can feed vehicles onto the ex- 

Lights on visual display map and meters on computers, linked by telephone circuits to 
detectors at different locations along the expressway, indicate current traffic conditions. 


essway at rates varying from four to 12 
■hides per minute. As congestion increases, 
le number of vehicles allowed to enter the 
Vpressway each minute is decreased, help- 
'ig to maintain free-flowing conditions. 
' In an additional test, an experimental 
motorist aid" phone for the reporting of 
Dllisions and stalled vehicles was recently 
istalled on one of the expressway's exit 
'imps. By installing the phone on the exit 
amp, instead of on the expressway itself, 
roject planners hope to learn whether motor- 
its will stop as they leave the expressway 
b report someone else's trouble. 

first North-South American 
Indersea Cable Link 

!■ Work has been completed on the first 
underseas telephone cable link between 
Jorth and South America. The cable, capable 
if handling 80 simultaneous telephone con- 
ersations, was put in service in August. It 
extends 50 nautical miles from St. Thomas in 
'he Virgin Islands to Maiquetia, Venezuela. At 
)t. Thomas, it is joined to an underseas 
:able from Florida, completing the North 
\merican-South American link. Communica- 
ions between the two continents were for- 
nerly handled via high frequency radio only. 
The first call over the new cable was made 
)y President Lyndon B. Johnson who spoke 
o Venezuelan President Raul Leoni. 

When announcing the scheduled start of 
jihe project, Lowell F. Wingert, vice president 
Ijf A.T.&T.'s Long Lines Department and 
iJorge Armand, president of the Compania 
knonima Nacional Telefonos de Venezuela, 

"The cable to Venezuela will mark a sig- 
nificant step forward in meeting the ever-in- 
;reasing need for communications facilities 
Detween the two continents. Its installation 
dramatizes the growing community of interest 
and rapidly expanding commerce between the 
Jnited States and Venezuela. 

"Whereas 67,000 telephone calls were 
3laced between the two countries in 1965, 
:he figure is expected to double this year 

and increase to more than 225,000 calls 
annually by 1970." 

The $6.4 million cable system is a joint 
undertaking of A.T.&T. and the Venezuelan 
telephone company. 

English for Computers 

H A new form of English will eliminate 
computer confusion about the relation 
of words in a sentence. The language, which 
was developed at Bell Telephone Laboratories, 
is called FASE for "Fundamentally Analyzable 
Simplified English." 

Sentences in FASE can be easily parsed 
(resolved into parts of speech) by a com- 
puter. For this reason, FASE may eventually 
be the basis for information retrieval by 
machines in libraries and institutions which 
handle large numbers of written documents. 
For readers, FASE is indistinguishable from 
ordinary English. For example, this story is 
written entirely In FASE. 

FASE was devised by Dr. Lee E. McMahon, 
who is a psychologist studying ways of im- 
proving communications between computers 
and people. His work at Bell Labs is part 
of research in communications sciences — an 
area which includes the study of future com- 
munications networks which will handle mes- 
sages between computers or between man 
and computer. 

Dr. McMahon has reduced the English 
language to a strict form in which syntax 
(the orderly arrangement of a sentence) is 
clear and sentences are easily broken into 
component grammatical parts to avoid am 
biguity. A sentence in FASE strictly main 
tains the sequence of subject, verb and ob 
ject; modifiers like adjectives and adverbs 
and other parts of speech must fall into line 
A complicated set of rules has been devised 
to ensure unambiguous syntax. 

Dr. McMahon believes that FASE is an ade- 
quate tool for communicating a broad range 
of ideas and that FASE can say anything 
which needs saying. Since long passages of 
FASE may produce a somewhat flat prose, 
the language is most useful for applications 


»n>n»j3>i5ji3> j^, « 


Bell Laboratories' Dr. Lee E. McMahon. who devised FASE. is shown at computer console 

in which clarity of expression is preferable to 
an elegant style. For this reason, its immedi- 
ate application would lie in the mechanical 
indexing of scientific abstracts or documents. 
FASE also may provide a more accurate 
computer translation of foreign languages. 
Automatic translation of foreign scientific 
papers is growing into a big business; but the 
results are not always reliable. Although 
present mechanical translation is based on 
grammar to an extent, it involves complicated 
series of computer decision-making. To some 
degree, those necessary complications com- 
pensate for inherent ambiguities in the lang- 
uage being used. FASE, which removes the 
syntactic ambiguities in English, would sim- 
plify the task of the computer and lessen the 
chance of error. 

CNA Bureaus 

m Procedures for establishing Customer 

Name and Address (CNA) bureaus in 

the Commercial Department have recently 

been recommended as an economical way o1 
enabling service representatives to answei 
inquiries about long distance charges on theit 
bills by providing name and address infor 
mation of distant numbers. In most cases, 
the information can be obtained with mini- 
mum delay during the initial customer con- 
tact with the business office. 

The plan offers a number of benefits: im- 
proved handling of customer contacts, in- 
creased customer and service representative 
confidence in the accuracy of toll billing 
through immediate verification of the billed 
call, reduction of uncollectible toll adjust- 
ments and a decrease in the volume of in- 
Company calls made to business offices. 

Telephone Hour Documentaries 

■ It will be a new Bell Telephone Hour, 
starting this fall. Beginning with the 
premiere show on September 25, the Tele- 
phone Hour will present on alternate Sundays 
a series of musical documentaries featuring 


utstanding events, personalities, movements 
nd ideas in the field of music. 

One of the programs planned for the cur- 
ent season is the "Festival of Two Worlds" 
iit Spoleto, Italy. Filmed on location, it will 
loresent the festival's creator-director Gian 
!;arlo Menotti, its participants and musical 

> Also planned are an onthe-scene report of 
iin American city as seen through its music 
Sind other arts, a television portrait of the 
ife of a renowned concert artist and special 
;hristmas and Easter programs. Additional 
subjects will be announced later. 
; It is hoped that the Bell Telephone Hour's 
■|ew format will bring an increased awareness 
)f the many significant events and move- 
nents in music and the other arts to tele- 
'ision viewers. For many people, the pro- 
'jrams will present aspects of the arts not 
often seen on commercial television. 
j Henry Jaffe Enterprises, Inc. will produce 
he Telephone Hour while Donald Voorhees, 
'vho has conducted the Bell Telephone 
orchestra since its radio debut 26 years ago. 
vill continue as musical director of the series. 
The programs will be shown in color. 

'Clarified Helium Speech 

the new method was devised: the helium 
speech was processed through a special 
vocoder (voice coder) — a device first demon- 
strated by Bell Laboratories in 1936 — to re- 
store the natural voice quality. 

A vocoder separates and codes funda- 
mental vocal cord pitch and resonant fre- 
quencies produced in the vocal tract. Once 
coded, the information can be transmitted to 
a receiver and synthesized into a replica of 
the original speech. Naturalness was restored 
to the helium speech by modifying the vo- 
coder so that it returned the resonant fre- 
quencies to where they would have been in 
normal air. Fundamental voice pitch was 
preserved by the vocoder because it had not 
been affected by the helium atmosphere 

The effectiveness of the vocoder in in- 
creasing the intelligibility of helium speech 
was tested without constructing an operating 
model. A computer was programmed to simu- 
late components in the proposed vocoder 
system. Recorded samples of helium speech 
were converted into electronic signals and fed 
Into an analog-to-digital computer. The data 
were then fed into the simulated vocoder 
system. The output from the computer was 
reconverted to electrical signals which then 
produced the improved helium speech. This 
simulation showed that such a vocoder could 
be constructed for live communications with 
divers and aquanauts. 

■ Engineers at Bell Telephone Labora- 
tories have devised a technique for 
'estoring naturalness to speech distorted by 
3 helium atmosphere. Divers and aquanauts 
jsually work in a predominantly helium at- 
Tiosphere to prevent nitrogen narcosis, an 
jninhibited condition often referred to as 
'rapture of the deep." A peculiar "Donald 
Duck"-like voice quality results because the 
resonant frequencies of the vocal tract are 
changed and the velocity of sound is higher 
in helium than in normal air. 

A careful spectographic analysis by a Bell 
Laboratories engineer verified that helium 
changed the resonant frequencies but also 
showed that fundamental voice pitch is rela- 
:ively unaffected. Based on these analyses. 

Improved TD-2 

H The first TD-2 microwave radio system 
was placed in service in 1950 with a 
designed load carrying capacity of either 480 
high quality message channels or one tele- 
vision channel in each direction per pair of 
radio channels. In more recent years, TD-2 
radio systems have been more heavily loaded 
with message channels to meet service de- 
mands with some degradation in performance 
even though improvements over the original 
design were applied. 

Improvements to the TD-2 system have 
recently been developed that will permit in- 


creasing the message capacity to 900 chan- 
nels with transmission performance about 
equal to the original design objectives. These 
improvements are now feasible due to ad- 
vances in technology such as solid state cir- 
cuitry, more efficient electron tubes and in- 
creased knowledge in the field of antenna and 
waveguide propagation. 

A considerable portion of next year's long 
haul message channel facility relief will be 
provided by means of increasing the capacity 
of existing TD-2 radio routes. These additional 
message facilities can be constructed at a 
lower cost per circuit mile than would be pos- 
sible by new route construction. 

Origin of Hearing 
— A New Theory 

H studies by a Bell Telephone Labora- 
tories scientist suggest that the origins 
of man's hearing mechanism, particularly the 
middle ear, may have been found in a fish 
that lived 350 million years ago. Previous 
theories of hearing assumed that the ear- 
drum and stirrup bone, major components of 
the middle ear, first appeared some 300 mil- 
lion years ago in primitive amphibians. 

Calculations by Dr. Willem A. van Ber- 
geijk of Bell Laboratories indicate that the 
Eusthenopteron, or other members of the 
Rhipidistia family of prehistoric fish, would 
have been able to hear sounds not only 
through the water but also sounds carried 
through the air, with practically no loss of 
hearing acuity. His studies show that this 
fish had an air-filled sac, similar to man's 
middle ear, and also probably had an outer 

Biological research at Bell Laboratories is 
one means of obtaining a better knowledge 
of hearing, and thus, of communications. The 
hearing mechanism of mammals is compli- 
cated, inaccessible and difficult to study. Bell 
Labs researchers therefore also study simple 
primitive hearing organs, including those in 
fish. Calculations of the hearing capability of 
primitive fish, for example, provide insight 
into the hearing capabilities of higher animals, 
including man. 

3-D Movies of Inner Ear 
Made By Computer 

H A computer has been used to mal 
three-dimensional animated movies d 
picting the basilar membrane, the part of tl 
inner ear that translates sound waves in 
audible sensations. The movies may he 
scientists understand how we hear. 

The movies, produced at Bell Laboratorie 
were made by a computer which was pr 
gramed with a mathematical model or de 
cription of how the basilar membrane mov( 
under certain conditions. Using this progran 
the computer calculated the movements ( 
the membrane in general. Then the computi 
produced a stereo-optical view of what ha 
pens when a sound wave stimulates the men 
brane to perform the complicated movemet 
that might be called "the dance of hearing 

The film depicts the basilar membrane c 
a conical spring tilted at about 45 degree: 
A sound wave entering the ear travels fror 
the base of the membrane to its summi 
causing its various parts to vibrate in diffe 
ent ways. 

One of the most significant advantages c 
this computer-generated motion picture i 
that the complicated motions of the basils 
membrane can be seen clearly and studie 
in detail. This is because small, rapi 
changes can be slowed down and movement 
greatly exaggerated. For example, even th 
loudest sounds move the basilar membran 
by an amount measured in microscopic d 
mensions; yet there may be thousands c 
movements in the basilar membrane eac 
second. Without a computer, it would be in 
possible to calculate, let alone plot, th 
movements of the basilar membrane in r« 
sponse to even ordinary speech sounds. Th 
movements are so fast that to show clearl 
what happens when the spoken word "to" i 
heard takes two minutes of film time. 

Using these movies, movements of th 
membrane can be related to frequencies am 
intensities of sound. By studying these move 
ments, scientists are able to understand thi 
correspondence of physical motions to psy 
chological phenomena. 


Shown above are several frames from a computer-made 3-D animated movie produced at 
Bell Laboratories which depicts the basilar membrane, a spiral structure in the inner ear 
that converts acoustic vibrations into audible sensations. To view these pictures in 3-D, 
place a piece of paper on edge between images in any frame. Look at images with nose 
touching edge of paper: images will move toward each other, converge and appear in 3-D. 

What you can do 

about obscene, harassing 

or threatening phone calls 

It's our policy— indeed, it's 
our business — to make sure that 
customers I'eceive the best pos- 
sible phone service. 

That's why, when the tele- 
phone becomes an instrument 
of annoyance, unpleasantness or 
harassment, it's a matter of the 
most serious concern to us. 

There are three things that 
you and members of your family 
can do about such calls, if you 
receive any. 

1. Don't talk to a caller you're 
doubtful of. Don't give him the 
audience he wants. 

2. Hang up at the first obscene 
word, or if the caller doesn't say 
anything, or doesn't identify him- 
self to your satisfaction. 

3. Call your Bell Telephone 
Business Office if the annoyance 
persists. We have employees who 
are trained to assist and advise 
you and who can frequently help 
in identifying the origin of un- 
welcome and troublesome calls. 

In communities across the 
nation, we are working with 
police officials and other author- 
ities to curb abusive calling. 

In most circumstances we can 
reveal the origin of abusive calls 
to law enforcement authorities 
with the consent of the called 
party. We want to do all we can 
to protect your right to pi'ivacy. 

The more everyone cooperates, 
the fewer such calls there will be. 


Bell System 

p-b-a-'ai. Periodical Dept. 
Kansas City Public Library, 
Kansas City, Mo., 6. 


u. s 






KIT N(6 

p,;„,.,j :„ II 

id ci i teleph 



2 The Innovation Process 
Jack A. Morton 

16 Excellence of Service 

18 Serving the Nation 
Benjamin H. Oliver, Jr. 

30 Phone in a Gilded Cage 

Leighton C. Gilman 


Donald R. Woodford 

Managing Editor 

Alix L. L. Ritchie 

Associate Editor 

Salvatore J. Taibbi 

Art Editor 

Frederick R. Kappel 
Chairman of the Board 

. I. Romnes 


Charles E. Wampler 


John J. Scanlon 


Published for the 

Bell System by the Publii 

Relations Department, 

American Telephone and 

Telegraph Company, 

195 Broadway, 

New York, N.Y. 10007 

Area Code 212 


34 From Echo and Telstar to Comsat and cables 

38 Dollar Squeeze 

46 The Human Measure 

48 In The Nev/s 

This magazine is published to present significant 
developments in communications and to interpret Bell 
System objectives, policies and programs for the 
management of the Bell System and for leaders of 
business, education and government. 


On the cover: The painting is one of several made 
by Bernard D'Andrea at Bell Laboratories and 
Western Electric. This artisfs-eye-view of re- 
search in computer technology symbolizes a 
segment of the innovation process, which 
IS examined in depth on pages 2 through 15. 




Jack A. Morton 

Vice President 

Bell Telephone Laboratories 

More today than in the past — and more 
in the future than today — industrial sur- 
vival depends upon technological innova- 
tion. Innovation means improving the 
old or developing new industrial tech- 
niques, products or services. This im- 
plies growth, but not just in size. In- 
novation must lead to growth in tech- 
nology's ability to meet the more chal- 
lenging needs and opportunities of our 
changing world. 


The Innovation Process 

Innovation is not a simple action, but a 
total process of interrelated parts. It is 
not just the discovery of new phenome- 
na, nor the development of a new prod- 
uct or manufacturing technique, nor the 
creation of a new market. Rather, the 
process is all these things acting to- 
gether in an integrated way toward a 
common industrial goal. 

In earlier times, these specialized 
acts took place at widely separated 
times and places. Offtimes the acts and 
their couplings were random-like and it 
was difficult to see them as related parts 
of a total process. In the past, only a 
small amount of our technology was 
science based. Even today, not all of our 
technology comes from research nor is 
all research directly relevant to indus- 
trial goals. 

We are learning that technological in- 
novation is a process for better coupling 
of industrial goals to relevant research. 
As a process it is complex but clearly 
structured from basic specializations 
coupled together tlirough a common pur- 
pose. By paying attention to the purpose, 
to the parts and to the couplings of the 
process, we can accelerate and improve 
the effectiveness of industrial innovation. 
All the parts and their couplings of the 
process must stem from the individually 
creative, yet cooperative actions of 
people — it is a people process with a 

We can not order people to create 
what we need — for creativity can not be 
programmed. Creative people can be 
broadly motivated if they are given scope 
for imaginative contributions toward a 
known goal. Even better is self-rrwtiva- 
tion — the only kind that brings out total 
commitment. It springs from goals that 
challenge and rewards that satisfy. 

Management and creative people can 
be in basic agreement, through their com- 
mon interest in relevant innovation — one 
needs to get it, the other needs to give 
it. How can we make innovation to a 
purpose self-motivating for creative in- 
dividuals? Can we build a people-sys- 

tem in which relevant innovation "cor 

A Systems Approach to the 
Innovation Process 

Management's role in the people-proct I 
of innovation is like that of a systeii 
engineer for a complex information-prc 
essing machine. As always, analogic 
must be used with caution. The compoj 
ents of a human "innovation processo 
are creative people, each with differs 
capabilities and needs. Its manager m; 
design a creative, adaptive system 
he must not try to "program" it in tl 
computer sense. It will be a living, d, 
namic organism — not one that just f( 
lows a prearranged schedule but one th| 
can learn, adapt, and grow in a changii 

To work together toward a commc 
goal, specialists need a common philos^ 
phy and language at each interface b 
tween their respective specialties. Ca 
systems engineering, which was deve 
oped originally for studying technic: 
systems, provide this? We need on! 
restate some of the things that systen 
engineering does: 

• it identifies limitations, needs, an 
opportunities, so as to state over-a 
goals and give them priorities; 

• it determines alternative potential sc 
lutions and develops measures of thai 
relative cost- effectiveness; 

• it distinguishes between what i 
known and what needs to be know; 
about problems and alternative solutions 

• it selects and develops the mos 
promising combinations of problems an< 

Stated this way, systems principles ar< 
not technically narrow; they can b( 
meaningful to all the kinds of peopl< 
who must work together. In these terms 
marketer, manager, engineer, and scien 
tist can all understand what the others 

are saying. And each can make himself 
understood. All can be inspired toward 
creative, coordinated efforts if their com- 
mon purpose provides challenge and re- 
ward to different minds. 

In an industry like nationwide com- 
munications, which must necessarily be 

The Innovation Process 

technically integrated, it has been natu- 
ral that the systems engineering should 
find application in the people-part of the 
process as well as in its technical parts. 
The Bell System is an organization of 
many diverse people who discover and 
transform relevant knowledge into new 
and improved technology for communica- 
tions. They use this technology to pro- 
vide improved services, salaries, and divi- 
dends to an even larger group of diverse 
people. These people, in turn, supply es- 
sential feedbacks to the system from 

their many viewpoints. If we are sensi 
five to these "error signals" as to the 
quality of our total effort and tak( 
proper action in response to them, we 
can continue to grow in capability. 

Structure and Functions of 
Bell Laboratories 

The essential ingredients in the re 
search and development part of the in 
novation process — as in the total proces.' 
— are people, organized into a process 
with a purpose. 

People come first. Scientists and en 
gineers of the highest possible profession 
al competence and motivation are essen 
tial. The appropriate mixture of the best 
possible technical people must be care 
fully selected, recruited, and continuous 
ly educated. It means that management 
must recognize the role of technology ir 
industrial innovation, with science as its 

source. Most importantly, it means pro- 
viding cliallenge and reward for the in- 
dividual as the creator of the new science 
and technology. 

Purpose is second. People working in 
ila laboratory that is part of a total inno- 
vation process must understand clearly 
why it exists — what business it is in and 
what business it wants to be in. Without 
such a clear purpose, people cannot see 
■the professional challenge of serving the 
over-all system, nor can the system re- 
ward them when they achieve relevant 

On the one hand, the system's purpose 
should be as broadly stated as possible, 
to take advantage of the widest range of 
research and to provide the maximum 
challenge for diversified people. On the 
other hand, it must be specific enough 
to focus the efforts of all specialists. Aim- 
less searching for diversification can re- 
sult in unfocused, uncoupled behavior. 
No enterprise can be in every business 
throughout the total innovation process. 
Research and development, no matter 
how brilliant, will not contribute to the 
total process if it is not coupled to the 
world of manufacturing, operations and 
marketing. Finally, corporate goals must 
provide opportunities for individual 
goals and growth. A person does not see 
himself only as a part of his own labora- 
tory or company. He also sees himself 
as a member of his family, community, 
profession — and of his country and hu- 
manity as well. If business goals are not 
compatible with the goals of these 
groups, people in an industrial labora- 
tory will be incapable of complete com- 

Process is third and the structure 
which matches people to its functions. 
At Bell Laboratories, to best match 
goals to people with different motiva- 
tions and talents, we recognize clearly 
the separate but coupled specializations 
of basic research, applied research and 
development-design as shown on page 9. 
What kind of information is generated 
by the specialists in each part, and what 

kind of coupling is necessary to combine 
their different talents into a connected 

Functions of Basic Research 

We depend on basic research people 
to perceive and generate new scientific 
knowledge of long-term relevance to the 
company. It is essential that they know 
both the basic limitations of old tech- 
nology and new scientific possibilities. 
Some examples of such relevant research 
have been the discovery and appUcation 
of the transistor effect, the synthesis of 
new materials such as superconducting 
niobium-tin, and new system concepts 
such as modulation, feedback, and in- 
formation theory. 

Such advances are not lucky accidents 
— not randomly discovered "solutions 
looking for problems." Rather, they are 
answers to known problems and antici- 
pated opportunities. They cannot be 
specifically scheduled, but are definitely 
stimulated if the research man is aware 
of the relation between communications 
goals and relevant fields of science. 

Such breakthroughs are not all. The 
research that produces them provides the 
opportunities for new technology; the 
payoff comes only when applied research 
and development follow. From the raw 
material of basic research, applied re- 
search and development meet specific 
technological needs or create new service 

A close personal interaction between 
research workers and development peo- 
ple is essential to both groups. The re- 
searchers provide the knowledge and 
stimulus that reduce empiricism and in- 
crease the effectiveness of development. 
In turn, this interaction provides the re- 
search man with a feedback of needs for 
further understanding while the subject 
is still hot. It also provides new and bet- 
ter tools and materials for research to 
use. Development success or failure gives 
research people a measure of corporate 
relevance for their work, which goes be- 

between the 
Bell System 
and society 




yond its appraisal as new science by 
their professional peers. Quite frequently, 
this close coupling provides the research 
man with the opportunity and challenge 
to move into development. 

Functions of Applied Research 

The functions of applied research are 
to identify the most pressing technologi- 
cal needs and opportunities and to ap- 
ply new research knowledge to demon- 
strate the technical feasibility of new ma- 
terials, devices, and systems. It must 
also develop complete understanding 
and expansion of the new technology to 
its basic limits, so as to maximize its 
range of performance and applicability. 

To be effective, applied researchers 
must use the same tools and procedures 
as basic research does. The modern en- 
gineer must be able to vmderstand and 
apply scientifically the output of basic 
research. In addition, he must under- 
stand and practice the systems method — 
not only because of its problem-solving 
power but also because of its aid in se- 
lecting and evaluating the most needed 
innovations in the overall system. It is 
most important that applied researchers 
be aware of the relative economic poten- 

tial of new technologies in choosing be 
tween alternative potential solutions. 

Functions of Development and 

From the reservoir of basic and ap 
plied research, the development-desigi 
engineer can select the best technologj 
for the design of a specific function. A 
this stage in the process, the design en 
gineer must carry the development mucl 
farther in quantitative detail. Not onlj 
do performance requirements becomt 
more precise and numerous, but relia 
bility, cost, and timing now become 
major measures of effectiveness. This 
widening set of requirements and mea 
sures increases the range of solutions 
and the importance of cost-effectiveness 
judgments. It provides a new set of chal- 
lenges to the engineer, and a new set ol 
viewpoints and knowledge is required 
The final output of this phase is a design 
that meets the service objective of maxi- 
mum performance at minimum annual 

Unless such objectives can be met at 
the right time, the original basic and ap- 
plied research have not contributed tc 
the total innovative process. The final 

;:parate but coupled specializations 


















X fOR 









/ I \ 





yardstick of a new design is its ability to 
produce old services at less annual cost 
than the old technology permitted — or 
new services not possible before. 

Importance of Communications 

I In all these major functions of the 
(laboratory phase of innovation, we are 
dealing with the generation and trans- 
formation of information. Innovation is 
.both a forward-acting and a feedback 
'system, in which the processing is done 
by people with diversified skills, knowl- 
edge, and motivations. It therefore de- 
pends vitally upon communications 
iimong these people. At least four factors 
influence and control such communica- 
tions. We must pay attention to them 
all in order to stimulate cooperative ac- 
tion toward a common goal. 

First, there is language. If people do 
not understand one another, if their 
levels of scientific and technical knowl- 
edge are too different, they cannot com- 
municate effectively. 

Second, there is space. Even when peo- 
ple are educated to the same extent and 
able to talk the same language, distance 
can still be a barrier to efTective and fre- 
quent communications. Spatial separa- 
tion of different specialists can be a 
block to easy "eyeball-to-eyeball" dia- 

Third, there is organizational struc- 
ture. This should correspond closely to 
the well-defined basic functions and in- 
terconnections of the innovation process. 
Person-to-person dialogue and decision- 
making must occur directly across spe- 
Icialist interfaces at all levels. Delays, 
I noise and distortions will result if com- 
munications must go up and down or- 
ganizational lines. 

Finally, there is motivation. There 
must be commensurate challenges, free- 
doms, and rewards throughout the proc- 
ess, from basic research to marketing 
and operations, so that everyone will 
want to communicate for the common 

Barriers and Bonds for 

In terms of these four communications 
factors, we can do things that will inhibit 
the flow of information and other things 
that will encourage it. We can build bar- 
riers and bonds — offtimes working to- 
gether in complementary fashion — to op- 
timize the flow of information and action 
throughout the innovation process. 

Although there is a prevailing idea 
that Bell Laboratories is completely au- 
tonomous, this it not at all true. Of 
course. Bell Labs is organizationally 
separate from the Western Electric Com- 
pany, since each has its own president 
and board of directors. In this sense, 
Bell Labs is autonomous, and we believe 
this to be a good thing. If both organiza- 
tions reported to a common head too 
low in the System, a screaming manufac- 
turing emergency, for example, could 
bring research to a halt. Not only could 
we lose our long-term research, we might 
lose our researchers too! Early in the 
game, this was our situation — the labora- 
tory functions were not corporately 
separate and we did have some such 

But total autonomy and isolation are 
not the answer, either. If this were the 
case, how could research know about and 
be moved by the System's over-all goals 
and problems? How could research iden- 
tify the relevant areas of science or fore- 
see new potentialities? How could de- 
velopment determine the economic manu- 
facturability of its designs or be influ- 
enced by innovations in manufacturing? 

Until the end of World War II, two 
barriers to communications existed be- 
tween Bell Labs and Western Electric 
people. One was organizational, and this 
barrier still exists. The other was spatial; 
Bell Labs was a long distance from many 
Western plants. These two barriers, to- 
gether with the different training and the 
desirably different motivations of the 
people in the two organizations, made 
communications between them infre- 


The Innovation Process 

quent, formal, and time-consuming. 

This spatial barrier has since been re- 
placed by a spatial bond. We have 
moved our development-design people in- 
to laboratories on Western Electric prem- 
ises. Organizationally, they belong to 
Bell Laboratories; spatially, they are 
strongly linked to Western people. On a 
day-to-day basis, design for best perform- 
ance and reliability can be balanced 
against design for minimum cost of man- 
ufacture. The close interaction required 
between design and process in today's 
technology can be tackled jointly with 
minimum delay. Mutual understanding 
and respect develop continuously in such 
an arrangement. 

Of course, creating this bond betwee 
design and manufacture resulted in : 
spatial barrier between Bell Labs' ap 
plied research and its development 
design. To offset this barrier, these twi 
functions are integrated organizationalt 
within Bell Laboratories at the lowes 
level consistent with group size anc 
common technology. Such a bond aids ii 
the timely and effective flow of infor 
mation and people across the spatiai 
barrier. It reduces duplication and rede 
velopment, matches people's skills tt 
jobs more effectively, and helps to main 
tain equality of competence in both 
applied research and development 


On the other hand, an organizational 
rarrier at the highest possible level ( vice 
iresident ) protects the freedom and con- 
inuity of Bell Labs' basic research. The 
emptation and opportunity to distract 
he researcher with development prob- 
sms is inhibited and prevented. Con- 
ersely, basic research and applied re- 
earch should have close, day-to-day, 
■eneficial communications. Spatially, 
hey are located as close together as 
lossible — preferably they are intermixed 
n the same building. Such an arrange- 
bent makes it easy for information and 
leople to flow across the organizational 
Interface (because of the close spatial 
!)ond), but without fear that one func- 
ion will dominate or impede the other 

because of the organizational barrier). 

ionds and Barriers 

n Complimentary Fashion 

Thus, we try to use bonds and 
)arriers in complementary fashion — 
wherever we have a space barrier we try 
o have an organizational bond, and vice 
i'ersa. Two barriers should never exist 
ogether, lest information flow be im- 
peded; two bonds should never exist 
ogether, lest one specialist group domi- 
late the other. 

We must always remember, however, 
■hat information is generated and com- 
nunicated by people. Although organi- 
i^ational structure and spatial relations 
ian help, all can still be lost if people's 
jommon language, motivation, and re- 
spect are absent across specialist inter- 

' The idea, still held by some, that all 
■he bright people are in research and all 
he drones are in development and 
'nanufacturing is passe. Our research 
beople are themselves the staunchest de- 
enders of this faith. They well know that 
'he stronger the people in applied re- 
search, design and manufacture, the 
nore freedom the research people will 
lave to explore new relevant frontiers — 

and the more assurance they will have 
that their efforts will be fruitful. Equality 
of competence, challenge, and reward- 
together with the timely flow of people 
and ideas across specialist interfaces — 
are necessary ingredients in the iimova- 
tion process. 

The Role of Systems Engineering 

We have discussed how Bell Labs' 
research and development are coupled 
internally and with Western Electric to 
produce rapid conversion of science into 
new technology for service. But Bell 
Laboratories must also couple to the 
world of science, to AT&T, to the 
operating telephone companies, and to 
the general marketplace. These relation- 
ships aid its judgments as to what sci- 
ence is relevant and what technology is 

Through their publications, profes- 
sional societies, and university associa- 
tions, research and development people 
are well-coupled to the world of science 
and technology. But the other important 
links — to AT&T, the general market- 
place, and the operating companies — are 
numerous, geographically dispersed, and 
quite different in content. As a result, it 
is sometimes difficult for specialist re- 
search and development people to ab- 
sorb, understand, and be challenged by 
economic and social needs and oppor- 

For this reason, we have a distinct 
Bell Laboratories function called "sys- 
tems engineering." Systems engineering 
is not in the research-development-manu- 
facture line. What, then, are the main 
functions of these people, and what kind 
of people are they? Generally, they are 
former specialists of experience and 
judgment. They usually are top technical 
people who have broadened their view- 
points and knowledge to include several 
disciplines, including economics. In 
short, they are the generalists of Bell 
Laboratories. One of their big jobs is to 
build information bridges connecting 


The Innovation Process 

Bell Labs to AT&T, and the operating 

Systems engineering people, because 
they are an essential part of Bell Labs, 
are in constant touch with current and 
potential science and technology. By 
relating technological possibilities to 
known business needs, they develop 
plans for proposed new system develop- 
ments. These plans formulate all the 
technical requirements for a new system, 
develop all the relevant cost-effective- 
ness tradeoffs, consider some of the 
possible solutions, and take inventory of 
all the technology needed for the new 
system's success. No project for a new 
large-scale system should be launched 
without full knowledge and calculated 
risk of missing critical capabilities. This 
is particularly important since large 
commitments in time and manpower 
must be made in the development-de- 
sign phase. Generally speaking, the 
development-design part of the total 
process may range from five to twenty 
times the cost of the original research 
that gave it birth. 

to know business needs and technologi 
cal possibilities, to translate these intc 
systems proposals and evaluations, anc 
to catalyze the work of the research anc 
development specialists into innovatior 
for the Bell System. 

Technological innovation is not i 
single function nor a random collectior 
of unrelated acts. To be effective, it musi 
be a total process of specialized but con 
nected parts all responding in a coordi 
nated way to over-all systems goals. 

In general, to become more competent 
systems must become more complex. As 
our technological systems become more 
complex, so also must our people-proc- 
esses for innovating them. Increased 
specialization and coupling are common 
to both. Through specialization, depth oi 
understanding and creativity are en- 
hanced. Through proper coupling among 
specialists and with the overall purpose, 
total system effectiveness is enhanced. 

Each Must Operate 
Above Critical Threshold 

Each Group Must 
Establish Subgoals 

But each group, whatever its specialty, 
translates the Bell System's over-all 
goals into subgoals for its own area of 
expertise, and makes its choice of rele- 
vance in those terms. If they know and 
understand the needs, specialists are 
able to make the best decisions within 
their own areas. Choosing the relevant 
areas of science is the responsibility of 
basic research people. Similarly, in ap- 
plied research the decision of what 
science to apply for what new technology 
is the choice of applied research people. 
And, finally, when management decides 
to act on a systems engineering pro- 
posal, development-design people make 
the choices of the best technology to 
meet its requirements. 

It is the big job of systems engineering 


One essential idea of the "system 
approach" is that each basic part of the 
total process must be operating above 
some critical threshold. Equally impor- 
tant, but difficult to achieve in the peo 
pie-process, are the critical couplings 
between the essential parts, especially 
when they are not part of the same or- 
ganizational entity. Whatever the goals 
and scope of a particular enterprise, 
whether integrated or specilized, mana- 
gers must understand innovation as a 
total process. An enterprise must achieve 
a critical level of excellence in its chosen 
specializations and an adequate coupling 
to all the other parts, whether in or out 
of house. 

Another essential idea of the "system 
approach" is that no one specialized part 
of the system should be optimized in 
itself to the detriment of the whole. 
Such autonomy is a form of system 
cancer — it mav lead to death for the 

whole system — or surgery for the cancer. 
In this sense, as part of the Bell System, 
Bell Laboratories restricts its work to 
: areas relevant to communications. 
; In summary, technological innovation 
lis a process — as such it can be studied 
jand improved through the systems 
approach. Within the laboratory part of 
the Bell System, besides the coupled 
functions of basic research, applied re- 
search and design, systems engineering 
provides over-all guidance, judgment and 
coupling to communications needs and 
opportunities. Systems engineering, as 
part of the whole, promises not complete 
assurance, but a reasonable prejudgment 

of relevance and cost-effectiveness before 
large expenditures are made. As Fred- 
erick R. Kappel, chairman of AT&T's 
Board of Directors, has said — "Looking 
before you leap need not shorten the 
jump — it may assure that you land on 
your feet." 

Technological innovation is above all 
else a "people-process with a purpose." 
It depends not only upon the creative 
excellence of all its specialists; it is 
vitally dependent upon the communica- 
tions barriers and bonds between its 
specialists — and upon the unifying 
challenges and rewards of the overall 
system goals. 


Jack A. Morton 

About the Author 

In writing on "The Innovation Process." Jack A. Morton 
draws upon his extensive experience in technical manage- 
ment at Bell Laboratories. He has written and lectured 
widely on the philosophy of this mcreasingly important sub- 
ject, and to a considerable degree, has helped to shape the 
amazing technical revolution of the semiconductor industry. 

Now vice president in charge of Electronic Components 
Development at Bell Labs, a post he has held since 1960, 
Mr. Morton devoted his early years of work there to research 
in coaxial cable repeaters and microwave amplifiers. When 
the transistor was ready for applied research in 1948, he 
was put in charge of all semiconductor development work. 
In 1952 he became assistant director of Electronic Ap- 
paratus Development, including the transistor, and a ysar 
later he was named director of Transistor Development. In 
1955, as director of Device Development, he was responsible 
for both the fundamental development and development for 
manufacture of electron tubes, solid state devices and elec- 
tromechanical and passive devices. 

Mr. Morton received the B.S. in Electrical Engineering from 
Wayne University in 1935, the M.S. in Engineering from the 
University of Michigan in 1936 and the honorary Doctor of 
Science from Ohio State University in 1954 and from his 
own alma mater in 1956. 



excellence of service: 

the bond between customer and shareowner 

During the presentation of testimony and cross examination in the 
current Federal Communications Commission interstate rate hearings, 
there have been questions as to the relevance to the customer's interest 
of our testimony on the need for a rate of return that would meet 
investor interest. 

AT&T Vice President and Treasurer John J. Scanlon best answered 
these questions when he said: ". . . While I shall be speaking for 
the most part from my experience with investor interests and expecta- 
tions, I do so recognizing that meeting these needs and expectations 
is but a means of achieving our primary goal of service. ... We can 
best meet our goal of service — the customer's interest — only as we 
realistically meet the investor's interest as well." 

In cross-examination, Mr. Scanlon discussed what he meant by the 
customer's interest; "In my view, the customer's interest is in high- 
quality, low-cost service, when he wants it, where he vrants it. 

"The customer's interest is in a service constantly growing in con- 
venience and usefulness. 

"The customer's interest — increasingly — is in services and rates 
especially adapted to his needs, whether they be thos^'bf a residence 
subscriber, a bank, a government agency, or a nationwide industrial 

"And the customer's interest is in low rates." 

Mr. Scanlon added, "In the final reckoning, the telephone com- 
panies must price their services at levels attractive to consumers 
vis-a-vis other claims on their income, and in many instances, vis-a-vis 
competing communications services." Only through this combination 
of low rates and excellent service can the Bell System maintain 
earnings that will continue to attract investors and their capital. 

But low rates and efficient service do not automatically follow once 


money is invested. Bell System witnesses testified on the role of re- 
search and capital expenditures in providing communications service. 

Dr. William 0. Baker, Vice President-Research at Bell Telephone 
Laboratories, spoke on the role of science research in meeting the 
service needs of all communications customers, from the housewife, 
to the large corporation, to the television network. Said Dr. Baker: "It 
is clear that the public wants and needs communications service with 
sufficient flexibility to transmit and obtain information in whatever 
form is most appropriate." To provide these complex services, he 
said, requires great scientific efforts and entails risk: 

"If we are to continue to provide the high quality service which the 
public has grown accustomed to expect from the Bell System, we 
must dedicate substantial resources to a comprehensive research 
effort to be followed up by heavy capital expenditures for benefits 
that can only be realized in the long run. Moreover, the rapidity with 
which we must make such commitments if we are to meet the needs 
of our users inevitably entails a high degree of risk. . . . Obviously, 
these risks cannot be undertaken unless the benefits we can realize 
are sufficient to justify them." 

This element of risk in the business — from research through 
implementation to an operating service — makes the investor's role 
important: His confidence in the company, his belief that the excel- 
lence of its service will produce increased earnings, must outweigh the 
risk. Excellence in service becomes the bond which unites customers 
and investors by reducing risk and stimulating further growth. As 
AT&T Executive Vice President Ben S. Gilmer pointed out, "The funda- 
mental motivation of our businss is to enhance the value of our service, 
for only in this way can we meet our responsibilities to customers, 
employees, and investors." 


the nation 

Benjamin H. Oliver, Jr. 

Vice President, Government Communications 

Long Lines Department, AT&T 

In this huge underground room beneath 

Strategic Air Command (SAC) headquarters 

near Omaha, Nebraska, Air Force and telephone people 

work together, around the clock, 

to maintain one of the vital communications 

links in our nation's defense system. 

The Bell System's committment in government 

communications, dating back many years, 

is described in detail on the next ten pages. 

serving the nation 

Half a century. That's how long it took 
the telephone to reach the inner circles 
of the White House and to become the 
indispensable tool of government that it 
is today. 

The first White House phone was in- 
stalled on Dec. 1, 1878 in a booth outside 
President Rutherford B. Hayes' execu- 
tive office. It stayed outside until March 
27, 1929, when President Hoover had the 
phone moved inside and placed on his 
desk. That move symbolized the vital 
role communications was destined to 
play in the years and decades ahead. 

The Federal government has grown 
bigger since then, and its reliance on all 
forms of communications has steadily 
increased. Big government means big 
communications. More than one million 
persons serving in the military and in 
civilian agencies around the world are 
assigned to various kinds of communcia- 
tions duties. And, approximately $30 
billion has been invested by the govern- 
ment over the years in communications 
equipment, everything from underseas 
cables to walkie-talkies. 

The government's dependency on com- 
munications probably exceeded all pre- 
vious highs during President John F. 
Kennedy's administration. It was then 
that the Hot Line, a teletypewriter link 

President Johnson is 

rarely out of reach of 

a phone; this Call 

Director telephone is 

on a coffee table in 

White House Oval Room . 

Wherever the President of the Unit<|S 
speaks publicly, the press is well supp 
a battery of phones for on-the-spot rj 

between Washington and Moscow, wa 
installed. It was then, too, that telt, 
phones sounded throughout the capitfi 
with an almost incessant ringing of bell: 
There is a story, possibly apocrypha 
that the White House switchboard w:i 
so heavily used by the New Front i(n-:^ 
men that it practically blew a fuse :i 
least three times. 

The telephone has continued to he 
vital instrument of command in the ad 
ministration of President Lyndon E 
Johnson, whose personal use of iihcine 
has been mentioned so often in the jnes 
that it is already legendary. 

Whenever the President of the United 
States travels, communications facilitie 
are arranged beforehand to assure liii 
continuous contact with Washing lor 
Likewise, facilities are set up for thj 
press, television and radio to provid 
instant nationwide news coverage of th 
President's activities. For security rea 
sons, details of the communications sys 
terns provided the White House and th 
President's ranch in Texas cannot b 
made public. 


serving the nation 

Speculation about who's calling whom 
from the White House is always popular 
on the Washington cocktail party circuit, 
but the really important telephone news 
in the capital is the government's greatly 
increased use of switched service com- 
munications. In the past, the military 
and civilian branches of gove-nment re- 
lied solely on point-to-point hookups 
which were designed to serve one purpose 
or one agency or department. Now, two 
large common-user networks developed 
by the Bell System and patterned after 
the public Direct Distance Dialing net- 
work are working for the government, 
knitting together vast numbers of civilian 
and Armed Forces personnel. 

Some point-to-point government cir- 
cuits are still in use, of course, and it 
is often these highly specialized channels 
which present the greatest challenge to 
communications technology. For ex- 
ample, top priority defense lines are 
necessary to warn of an enemy attack 
and to signal the retaliation; space flight 
circuits have to link orbiting astronauts 
and tracking stations around the globe: 
and high-ranking military officials must 
be made accessible at all times to the 
emergency ring of a telephone. 

In short, the government's needs are 
unique, unmatched either by the general 
public or in industry. These needs, by 
virtue of size and sophistication, have 
made government the Bell System's big- 
gest single customer. 

Providing the government with the 
kind of communications service it needs 
requires an extraordinary degree of Bell 
System teamwork. AT&T's Long Lines 
Department, with its experience in mak- 
ing interstate and international connec- 
tions, acts as the overall co-ordinator 
because so much government traffic 
crosses state boundaries and extends 

Within Long Lines, the Government 
Communications management group is 
the key liaison between the Bell System 
and top echelons of government in ar- 
ranging new military and Federal agency 

services. It gets involved in the whol 
spectrum of government communication 
Once the government's needs have bee 
determined. Long Lines Eastern Are 
headquarters takes over, co-ordinatin 
plant, engineering and traffic details o 
a nationwide basis. Its task is to mak 
sure the blueprints become operating n 

The associated companies, as well a 
independent telephone companies, pro 
vide and maintain government circuit 
within their boundaries. The Chesapeake 
and Potomac Companies are the busies 
in this respect, and a few figures tel 
why: C&P is responsible for 290,001 
government phones in metropolitai 
Washington, 180.000 in the District o 
Columbia itself; in the Pentagon alone 
there are 32,000 phones. 

Bell Laboratories and Western Electric 
are also intimately involved in govern- 
ment communications. Special require-- 

Main battle staff position at NORAD 

headquarters, Colorado Springs, gives 

hemispheric view of airborne objects. 


I* Inents call for special equipment, and the 
'* ijovernment frequently looks to Bell Lab- 
'* i)ratories to develop the new devices and 
^ 1,0 Western Electric to make them. Both 
't iiave been deeply engaged in the task of 
^ ;ielping the government bring into being 

• ^he two new common-user networks. 
'i These two networks— AUTO VON 

.( Automatic Voice Network ) and FTS 
i( Federal Telecommunications System ) 

• —are already the largest private line net- 

• works in the world, and they are still 
: ^rowing. By 1970 they conceivably could 
' fiave nearly 100,000 circuits between 

';hem, which is approximately the total 
' iiumber of Long Lines telephone circuits 
iin use last year for public long distance 

• AUTOVON, which was built for the 
military, will be the larger of the two. 
'Many Army, Navy and Air Force instal- 
ilations in the continental United States 
■'and Hawaii have access to it now. 

Telephone status rooms take fast 

action to correct any trouble on military 

circuits. Wall panels represent 

defense networks. 

Communication-equipped jets, air- 
borne around the clock, can control 
SAC's global force if needed. 

Bell System and Air Force experts at 

SAC constantly check status of worldwide 

telephone and radio channels. 


serving the nation 

Pay phones are installed at the press 

center in Cocoa Beach, Florida, near Cape 

Kennedy, for convenience of reporters. 

C\anada will be tied in late next year an. 
Europe within two years, according t 
current plans. Of the 19,600 circuit 
which will be in operation by the eni 
of this year, approximately 15 per cen 
will be used for data. 

The new network was initiated in 196: 
by connecting into it 700 circuits fron 
the Switched Circuits Automatic Net 
work ( SCAN ) , which predominatel; 
served the Army. Other military units 
including the North American Air De 
fense Command ( NORAD ) and mon 
recently the Semi-Automatic Crounc 
Environment ( SAGE ) networks havi 
been added. 

AUTOVON has several built-in fea 

«E'«^ -B<L-1^ ^^ ^ 

•^^ •f^^^- C^ •? \ IP \ «? f? t> V 



tures designed exclusively for military 
■use. One of these is the 16-button Touch- 
loneS phone which permits ranking mili- 
tary officers to pre-empt busy lines in 
itimes of emergency. This phone, with its 
multiple levels of priority, is an example 
of equipment designed by Bell Labora- 
itories and manufactured by Western 
Electric for the government. 
■ Other special AUTOVON features in- 
clude: connections on calls anywhere on 
sthe network within 10 seconds or less, 
(direct dialing between a military instal- 
lation and an airplane in flight, unusual 
•conferencing arrangements and the abil- 
ity to press a button and get a "hot line" 
connection through the network. To pro- 

vide maximum clarity of transmission on 
long distance connections, AUTOVON 
was designed as a four-wire network 
rather than as the usual two-wire system. 

Protection from enemy attack, a para- 
mount requirement for military circuits, 
received careful attention in the AUTO- 
VON design. Switching centers were built 
outside possible target areas, and a new 
polygrid routing arrangement was devised 
to reduce the strategic importance of any 
single switching machine. 

When the worldwide network is com- 
plete there will be about 100 switching 
centers, or major intersections, along this 
intricate web of communications routes. 
The network started with No. 5 crossbar 
switches, but the new equipment being 
added will be of the electronic switch- 
ing type. The change to ESS will permit 
greater flexibility in meeting changing 
demands and will facilitate providing the 
more sophisticated communications re- 
quirements of the future. 

AUTOVON is managed by an inter- 
departmental Long Lines team from an 
office near Washington. There, the blink- 
ing lights of a status board reveal the 
up-to-the-minute condition of the net- 
work. The operating team works closely 
with Long Lines' Defense Communica- 
tions Systems personnel who control the 
procurement and arrangement details for 
the trunk lines and co-ordinate manage- 
ment of the access lines. Part of the FTS 
network also is managed at the DCS 

Some military units rely on AUTO- 
VON for their administrative and backup 
traffic while using a separate special- 
purpose network for operational traffic. 
For example, the Strategic Air Com- 

Voice communications with NASA officials 
and astronauts in orbit are controlled 
and switched through this special board at 
Goddard Space Flight Center in Maryland. 


serving the nation 

mand's primary alerting system is a sep- 
arate network which enables the SAC 
Commander-in-Chief to establish im- 
mediate contact with the President of the 
United States and a worldwide strike 
force of missiles and manned bombers. 

The nerve center of this communica- 
tions complex is a cavernous room deep 
beneath SAC headquarters near Omaha, 
Neb. Highly specialized telephone con- 
soles, manned around the clock, link the 
headquarters with NORAD, the Joint 
Chiefs of Staflf and all SAC and missile 
bases. Sophisticated Bell System equip- 
ment and a dedicated team of Air Force 
and telephone people are the foundation 
of this important part of our defense 

The Ballistic Missile Early Warning 
System is another national defense asset 
with a highly individual communications 
system designed and coordinated by the 
Bell System. Dual communications 
routes flow from BMEWS' three widely 
separated outposts in the northern part 
of the world to NORAD headquarters in 
Colorado Springs. The proven depend- 
able performance of these circuits assures 
the United States of advance warning in 
case of enemy attack by missile. 

For the Federal agency side of govern- 
ment there is the second big Federal net- 
work, FTS. This huge system has become 
the administrative workhorse for more 
than 70 agencies. Some 700,000 govern- 
ment workers in 525 cities and towns in 
the United States now use it for their 
long distance calling. Prior to the crea- 
tion of FTS, they used individual agency 
networks or the public long distance net- 

FTS was developed with two primary 
missions in mind: to handle day-to-day 
administrative traffic; and to give the 
government supplementary circuits in 
times of national emergencies, when the 
DDD network might become overloaded. 
In its role as emergency backup to the 
public network, for example, FTS kept 
government channels open during the 

SAC underground command post, cramm 

with special communications equipmer 

can alert world-wide air striking fore 

Alaska earthquake in 1964 when regulg 
circuits to that state were clogged b 
calls from worried relatives. 

The full-scale network had been orig 
nally scheduled to go into operation las 
year, but the General Services Adminis 
tration urged that it be readied a yea 
earlier than planned. Throwing its oh 
time schedule away, the Bell System re 
doubled its efforts and launched the net 
work in July, 1964. 

FTS has been expanding at an un 
precedented rate ever since. The origins 
5,000 circuits will soon be tripled. And 
instead of handling 13 million calls .- 
year, as forecast, FTS is handling threi 
and a half times as many. 

Washington's awareness of the tele 
phone as a quick, economic and efficien 
way to conduct business has been greatly 
sharpened by the addition of FTS. A; 
for government employees, they hav( 
welcomed the new system despite the 
occasional "busys" on the FTS line. Foi 


On Ascension Island — a tiny, remote, rocky dot in the mid-South 

Atlantic — Western Electric engineers check the massive radar antenna 

used for tracking ICBM's fired down the Atlantic Missile Range. 


one thing, government workers are no 
onger required to get specific authoriza- 
:ion before making a long distance call. 
iFor another, they are now calling more 
and writing less. 

; As in the military, many agencies have 
their own separate operational networks, 
^n example is the National Aeronautics 
md Space Administration's NASCOM. 
m 829,950-mile manned space flight net- 
iNork. This vast tracking system is con- 
rolled through the Bell System-designed 
3CAMA II console at the Goddard 
Space Flight Center in Greenbelt, Md. 
The Gemini Launch Data System 
( GLDS ) , created for the Gemini flights, 
is part of NASCOM. This radio and 
oable complex of data, television, tele- 
phone and teletypewriter circuits com- 
, arising GLDS funnels critical informa- 
tion on Gemni and Apollo missions from 
iCape Kermedy in Florida to the Manned 
jiSpacecraft Center in Houston, Texas. 

The Bell System, which engineered 
GLDS, also provides intricate communi- 
cations services for the Federal Aviation 
Agency's air traffic control systems and 
for the Weather Bureau's ESSA and 
Tyros satellite programs. Other Federal 
agencies using private line services 
range from the Voice of America to the 
Veterans Administration and from the 
Atomic Energy Commission to the 
Bureau of Reclamation. 

A feature of the Bell System's total 
communications service which has special 
implications for the government is the 
emphasis placed on survival and con- 

In the last 10 years more than 10,000 
miles of broadband routes have been con- 
structed around large cities and other 
likely target areas so that an enemy at- 
tack on a major site would not destroy 
vital circuits. The blast-resistant or hard- 
ened cable is another major survival fea- 


serving the nation 

ture. Hardened cable systems, with their 
underground communications centers and 
emergency power equipment, would pro- 
vide substantial protection against nu- 
clear attack. 

If regular telephone administration 
offices were ever knocked out by the 
enemy, emergency control centers are 
prepared to assume temporary command. 
Unannounced daylong drills are held 
periodically to test the readiness of per- 
sonnel assigned to these centers. 

To minimize normal disruptions in 
service, and to function whenever needed 
for emergencies, restoration control of- 
fices and plant status centers have been 
located strategically throughout the 
country. Alternate routing plans covering 
every conceivable situation have been de- 
veloped to bypass trouble spots and keep 
traffic moving. The status centers, inci- 
dentally, keep in close touch with the 
Defense Communications Agency, noti- 
fying it immediately of any failure aflfect- 
ing defense services. 

This stress on survivability and con- 
tinuity has impressed government offi- 
cials responsible for overseeing Federal 

Closed-circuit TV cameras focus on SAC \n 

officer. Information gathetj 

forms basis for "alerts' 

over Primary Alerting 


communications. It is a worthwhile asse 
in the government's defense ledger, onij 
of many recorded by the partnership b( 
tween goverimient and the Bell Systei 

This partnership requires everyone 
volved in it to shoulder substantial 
sponsibilities. The preservation of th^ 
nation literally depends on the eflfective| 
ness of its commimications circuits. Thij 
fact adds a tremendous stimulus to th( 
work of those people in government com] 

Obviously, the technical demands or 
telephone people to establish top-flighi 
performance on all government communi 
cations channels are often exceptional 
But the final goal is disarmingly ordi 
nary, easy to understand and the same 
one that the Bell System has always held 
to be fundamental to our business. It is 
simply to provide the best possible 

About the Author 

Benjamin H. Oliver, Jr. 

As one of the men responsible for all communications 
services which Long Lines furnishes to the government, 
Mr. Oliver is eminently qualified to v^^rite upon the subject. 
In July, 1962 he was named director of government com- 
munications in Washington, and, since 1964, has been vice 
president in charge of government communications for Long 
Lines. He is recent past president of the Armed Forces Com- 
munications and Electronics Association, and is a member of 
the American Legion and the 35th Division Association. 

A graduate of Stevens Institute of Technology, Mr. Oliver 
served in many posts in the Plant Department of the New 
York Telephone Company. In 1955 he joined AT&T as 
assistant vice president — Plant Operations. Three years 
later he was appointed vice president — Upstate Territory 
for New York Telephone, the position which he held until 
going to Washington. During World War II, Mr. Oliver served 
with the U. 8. Army Signal Corps, attaining the rank of 







rn H 0tiiO€(» c(fi0€ 

Fashion is a fickle mistress. Her es- 
sential quality, at least in the commercial 
sense, is change. Change implies some- 
thing new or a new version of something 
old. Paradoxically, where fashion — and 
fad — are concerned, it may also be an 
old version of something new. 

This could account for the present, and 
growing, desire on the part of telephone 
customers for exotic phones out of the 
: past or from foreign lands. Whether or 
not the whimsies of fashion have gener- 
ated today's popularity of "antique-dec- 
orator" sets, the fact remains that many 
of them are being made, offered for sale 
and bought by the public. 

And there, as Hamlet said, is the rub. 

The external appearance of a tele- 
phone may have little to do with the 
way it works, but what is inside does. 
Any customer should be able to pick up 
his phone and, by dial or operator or 
both, reach any other phone anywhere — 
rapidly, reliably, economically. This kind 
of service is the telephone companies' 
reason for being. The communications 
system that makes it possible is the larg- 
est, most complex, most sophisticated in 
the world. It is designed as a unit, and 
in order for it to work properly as a unit, 
every part must be compatible with every 
other part and of equal quality, down to 
the last wire, switch, relay, transistor — 
or telephone. And all of this immense 
nationwide network is not only designed 

as a unit but also it must be maintained 
as a unit, with all of its millions of oper- 
ating parts kept at a uniformly high level 
of efficiency and performance. It follows 
that what is inside the customer's tele- 
phone is just as important as what is in 
the central office, or in cables or micro- 
wave relay towers or any other part of 
the system. 

It also follows that the only practical 
way to insure that performance will meet 
design is for the telephone companies to 
control and maintain every part of the 
system, including the telephones them- 
selves. Regulatory agencies hold the com- 
panies responsible for providing efficient, 
economical service to their customers. 
Therefore, over the years, these agencies 
have upheld and reaffirmed this principle 
of the telephone company's providing the 
complete service. 

Furthermore, if telephones were owned 
by customers rather than by the tele- 
phone companies, this private ownership 
could be a barrier to improvements in the 
communications art, which are being 
made continually. Private owners might 
be unable or unwilling to replace existing 
items in which they have an investment 
and which become incompatible with im- 
provements in the system. For example, 
the introduction of dial, with the result- 
ing service improvements and economies, 
could not have been made as rapidly or 
as smoothly under divided ownership. 


vmvM ti> H (5tm)^i) mm 

Transmission quality has improved 
greatly over the years. Again, this would 
not have been possible if the Bell Sys- 
tem had not been able to improve the 
phones its customers use. Indeed, the 
telephone on the customer's premises is 
one of the most essential working parts 
of the communications network. 

Enter lady fashion with a seductive 
assortment of exotic phones, offered for 
sale in stores or through printed adver- 
tising. They have the attraction of 
novelty. A woman may consider a white- 
and-gold "French" phone more conso- 
nant with the decor of a French Pro- 
vincial living room or a Regency bed- 
room than many of the models offered 
by the telephone company. She is not 
thinking of performance; she is thinking 
of appearance. She will not like it, how- 
ever, if the fancy thing for which she has 
paid a fair sum of money doesn't work — 
unless it is solely for decoration. 

She will like it even less if the tele- 
phone company, to protect the quality 
of its service as a whole, refuses to con- 
nect her foreign set in the first place. 
Some customers may have thought the 
company was stuffy — even unreasonable, 
arbitrary — when, out of sheer necessity, 
exactly that has happened. Actually, 
there are sound technical reasons for the 
fact that the telephone companies must 
insist on uniform quality in the phones 
connected to the system. If the buyer's 
beautiful antique set has poor transmis- 
sion, or if its dial is unreliable so that 
she consistently gets wrong numbers, 
then it is not only impairing her service 
but also the service of everyone who calls 
her, or is annoyed by wrong numbers. 

And yet, the demand for antique-dec- 
orator telephones persists and grows. 
Having stated the case for company 
ownership and control of telephones, can 
the telephone companies pretend that the 
problem has ceased to exist, or that there 
are not customers ruffled by what they 
see as an arbitrary policy? The answer 
to the question is no, and one of the 
solutions to the problem has been found, 

so to speak, inside the telephone itself. 

The Bell System companies are no\ 
offering a Custom Telephone Unit. Thi 
is an assembly of telephone component 
which conforms to operating specifica 
tions of standard phones and which cai 
be installed in antique-decorator enclo 
sures. The Bell System will supply t( 
any manufacturer, on request, the desigi 
specifications of the Custom Telephon( 
Unit. If the manufacturer then wants t< 
make and market an antique-decoratoi 
enclosure of whatever period or persua 
sion which conforms to the specifications 
any Bell System company will instal 
the unit in the antique enclosure for e 
$10 one-time charge. Starting this fall 
several concerns will make available en- 
closures of exotic design which meet Bell 
System specifications. 

For customers who already own or may 
purchase in the future antique-decorator 
phones which already contain electrical 
parts, the telephone companies will, if 
possible, arrange to convert these instru- 
ments into compatible telephones for a 
one-time charge, usually about $25. As 
of the end of May, 1966, about 1,600 of . 
these antique-decorator sets have been 
modified by Western Electric Company. 
In any case, once the phone is installed 
and working, the customer pays only the 
applicable regular monthly charge forj 
main or extension service. There have 
been and may continue to be some in- 
stances where the modification is either 
impossible or too costly to be practical. 

The offering of the Custom Telephone 
Unit is a sincere effort to give our cus- 
tomers what they want. It is planned 
and implemented to insure that the 
quality of service — everyone's service- 
will not suffer, as it must not, at the 
hands of lady fashion. At the same time 
it makes a polite bow to the lady her- 
self. And the woman who has solved the 
last decorating detail in her French Pro- 
vincial living room can have the best of 
both worlds — the antique-decorator tele- 
phone she yearns for, and the quality of 
service she needs and expects. 


I Echo 


In this day when space launches are second nature 
to us, some of the pictures on these pages may seem to 
be ancient history. If so, it is only because develop- 
ments in space technology - especially in satellite com- 
munications — have literally rocketed ahead at such be- 
wildering speed that yesterday's marvels are crowded 
back into history, almost before they can be remem- 
bered, by tomorrow's plume of flame on the next 
l.'iunch pad. 

The Bell System's direct involvement in space dates 
back to 1954, when Bell Laboratories' Dr. John R. 
Pierce made the first concrete proposals for satellite 
communications. Echo I, shown here, was launched in 
1960 and Bell Laboratories' horn antenna at Holmdel, 
N.J. relayed the first voice signal from earth to space 
and back. Since then, the Bell System's involvement 
in space communications has mushroomed into multi- 
million-dollar commitments. AT&T Vice President 
Richard R. Hough recently pointed out that the Bell 
System has spent about $78 million in research and 
development specifically for satellite communication 
since 1959. Even that is a small fraction of the one 
and a half billion dollars spent by the Bell System 
since the end of World War II in fields generally ap- 
plicable to satellite communication. 

The System's research in the communication art 
has produced major contributions to space technology. 
Without such developments as the transistor, solar bat- 
tery, super-sensitive, low-noise receivers using ruby 
maser amplifiers, new forms of antennas, modulation 
techniques, waveguides and traveling-wave tubes, the 
Telstar '^' satellite ( lower left ) might never have electri- 
fied the world with the first live transatlantic television 


Bell System seeks accelerated satellite development, paralleling 
planned undersea cables, to meet communications needs of the futu 

Since the first Telstar experiments 
were made by the Bell System four years 
ago, solutions to problems of technology 
and problems of administration have 
been running neck-and-neck to keep up 
with the burgeoning demands of overseas 
communications. The Communications 
Satellite Corporation — Comsat — has been 
leasing the Andover earth station from 
AT&T since June, 1964, and recently 
reached an agreement with AT&T to buy 
the Andover installation, shown on these 
pages. (The FCC has ruled that Comsat 
should own the three initial U.S. ground 
stations. ) 

AT&T, faced daily with the need for 
commercial circuits to handle growing 
overseas calling, is anxious to speed de- 
velopment of satellite communications, 
and feels that joint ownership between 
the international communications com- 
panies and Comsat is necessary to ensure 
coordination between terrestrial and 
space facilities. 

To assure dependability and to meet 
the demands of overseas traffic, the Bell 
System proposes to use both cable and 
satellite circuits in whatever combination 
is needed to provide the best, most eco- 
nomical system. With about eight mil- 
lion overseas calls handled in 1965, 
AT&T foresees a need for 3,225 satellite 
circuits for international communications 
by 1980 — in addition to planned super- 
capacity cables which one day may carry 
up to 2,300 circuits each. 


■» * -^ *► *, « I 

v»/w« ywro ^/wra 




Housewives grumble about it. Busi- 
nessmen fret over it. Union leadens arc 
plagued by it. 

It makes politicians nervous and econ- 
omists argumentative. Though no one 
likes it. inflation is with us. In fact, it's 
been a persistent problem in our economy 
over the last quarter century. 

While almost everyone will accept that 
statement at face value, governmeni 
officials and private individuals will agree 
on little else about inflation. Exactly 
what causes inflation and what its beat 
cures are, are highly debatiible question.s 
among economists, iK)liticians, and busi- 
nessmen. Depending ujwn one's point of 
view, answers will difTer greatly. 

But this state of affairs is not at all 
surprising when the cfjmplexity of the 
subject is considered: economics, politics, 
business and international events all in 
fluence the course of inflation. There is 
no question, however, that inflation has 
a iKJl^-nt influence on families, the gov- 
ernment, and, including the 
Bell System. 




All Indicators Up 

Though economists do not completely 
agree on either its symptoms or its 
effects practically all will accept the 
broad meaning of inflation today as a 
persistent rise of prices in general. This 
eliminates both temporary price fluctua 
tions and increases in particular prices 
which are both normal in any healthy 

Inflation is usually measured by the 
general price indexes prepared by the 
U. S. Departments of Labor and Com 
merce, including the Wholesale Price 
Index ( WPI l , the C^onsumer Price Index 
( CPI ) , and the Gross National Product 
Price Deflators. Economists jx)int out 
that the CPI has some inherent upward 
bias because it does not reflect quality 
improvements made in products each and that the WPI does not include 


the prices of services rendered directly 
to the consumer; thus neither shows the 
complete price picture. Viewed together, 
however, they generally give the best 
overall view of inflation we have. Over 
the past decade, the CPI has increased 
at the rate of about II/2 per cent per 
year and the rise seems to be accelerat- 
ing this year. 

The symptoms and effects of the pres- 
ent inflation are visible in many places. 
Housewives grumble particularly about 
rising food prices in the supermarkets, 
businessmen fret over growing costs, and 
labor unions are restive about the cost 
of living. 

Inflation also hits hard at the nation's 
international position. The U. S. has had 
a balance of payments deficit for many 
years. In other words, our expenditures 
abroad have exceeded our receipts. As a 
result, we have lost some 40 per cent of 
our gold supply over the past eight years. 
Although this has been due to many 
factors other than inflation, the higher 
prices which inflation brings makes it 
harder to sell our goods abroad and eas- 
ier for foreigners to sell their goods here. 
Thus, unchecked inflation, if severe 
enough, could lead to international bank- 

Price increases hit hardest, first, at 
those with fixed incomes (pensioners, 
government employees, etc. ) whose pur- 
chasing power is eroded, and second, at 
those in the lowest income groups, who 
can least afford rising prices, and who 
are least apt to have assets that normally 
increase in value in inflationary periods. 
Higher costs for businessmen mean not 
only a choice between inadequate profits 
or raising prices, but also difficulties in 
making needed improvements, and ex- 

There are many complex reasons for 
the current inflation, and economists have 
yet to agree on its particular series of 
causes. However, it appears that it is 
possible to state, with many qualifiers, 
that there is a general pattern of eco- 

nomic, political and international facts 
behind today's rising prices. 

To stimulate the growth of the Amei- 
can economy, the government, over 1e 
past six years, has generally pursueda 
policy of fiscal and monetary expansici, 
involving increased government sper- 
ing, deficits, low interest rates andi 
rapid expansion of the money supp. 
This worked well for some time, and tj 
economy thrived while prices remain! 
relatively stable. 

As the expansion continued, these po- 
cies, particularly the tax cut in 1964, L| 
it to assume the proportions of a businej 
boom. A major segment of this booi 
was the huge increase in plant ail 
equipment spending. At the same tin.' 
the economy began to see the early sigv 
of inflationary pressure developing. 

Then, two more expansionary foro 
were added to the already boomii 
economy, both involving further increaa 
in government spending. Federal spem 
ing for domestic programs was increase 
further, while the war in Vietnam addf 
greatly to Federal defense spending. Tf 
cost of the war and the demand pressure 
it has generated overheated the econom; 
The result, in large part, has been ii 
creasing prices. 

Cost-Push vs. Demand-Pull 

There are, in the main, two basic way 
of looking at the causes of inflation, th 
demand side, on the one hand, and th 
cost side, on the other. Economist 
refer to these views more formally a 
demand-pull and cost-push. In the firs 
instance, an increase in demand — mor 
correctly an increase in spending — 01 
the part of consumers, businesses am 
the government will drive prices up; ii 
the second prices and wages may risi 
independently of demand. However, thi 
two are not mutually independent, am 
there are many forces at work today tha 
are strengthening both demand and cos 
increases. Many economists think tha 
the immediate inflationary balance is 


15 iiow shifting from demand-pull to more 

1 ; There is another factor related to gov- 
' Irnment spending in the inflation picture. 
s irhe passage of the Employment Act of 
£ (946 committed the nation to a policy 
t tif maintaining employment and income 
( it high levels. (High employment is 
t Hewed not as full or 100 per cent employ- 
ment, which is impossible, but as a low 
' rate of unemployment with roughly 4 
)er cent as a target. ) 
1 One way to increase the total number 
')f employed workers in the country is to 
■ncrease the Gross National Product 
GNP ) , and this is in fact what has 
lappened, through government encour- 
igement by aggressive monetary and fis- 
i-al policies. While these policies do not 

lead inevitably to inflation, during the 
early and mid-sixties they led to easy 
credit policies and deficits which brought 
increases in demand which, in general, 
have encouraged business and labor 
groups to push for larger incomes, and 
to drive prices up. 

As AT&T witness G. L. Bach, Profes- 
sor of Economics and Public Policy at 
Stanford University, pointed out before 
the FCC in the current interstate rate 
hearings: "While in principle such ag- 
gressive monetary and fiscal policy to 
maintain high employment need not 
involve rising prices, there is always the 
danger . . . that it may produce some 
price increases. . . ." The Employment 
Act of 1946, however, is generally viewed 
as cle facto recognition by the govern- 



ment that a small amount of inflation is 
more tolerable than unemployment. Ex- 
actly what amounts of each, however, is 
a very moot question. In fact, it may be 
that the combination of economic factors 
we seek— high employment, business 
growth, and stable prices— is impossible 
to sustain over a long period of time. 
All of these causes are involved in the 
current wave of price-wage increases. In 
addition, problems— not formally infla- 
tionary and often beyond economic or 
political control — have contributed to 
rising food costs. The current drought, 
for example, has driven up the cost of 
many farm products. And the current 
high prices of meat actually had their 
origin in low meat prices during 1964 
which led farmers to reduce their subse- 
quent production. 

Turning the Tide 

In all then, the inflation facing the 
nation today is extremely complex, and 
caused by many factors. But are there 
remedies? Are there any means of at least 
slowing inflation down, if not restoring 
price stability? 

The answer has to be a qualified yes. 
There definitely are remedies that can be 
taken, but economists and government 
experts are still not certain of how to 

best use the tools at their command, ai\ 
the international situation and domesi; 
politics place limits on the actions t!; 
government can and will take. It is dil- 
cult to know just how much effect i 
given fiscal or monetary action will hav, 
however, or what might happen to oth; 
factors operating in the economy at tl 
same time. Against this danger, of cours 
is the very real danger — almost inevi 
ability— that inflation itself, if \d 
checked, will bring on a recessic 
through the distortions which it creat( 
in the economy. It is this narrow tigh, 
rope which must be walked: enoug 
anti-inflationary measures to check infl; 
tion firmly and quickly, but not so man 
that the economy is turned into recessioi; 
Some of the possible remedies for ir 
flation are now being spooned out i 
large doses, but so far they have failei 
to halt the rise in prices. A recent casu 
alty, for example, was the President' 
wage-price guideposts calling for volun; 
tary restraints on labor and business. 

Interest and Money 

The Federal government, most econo 
mists agree, has two main weapons tc 
use against inflation: monetary policj 
and fiscal policy. Monetary policy refers 
to the measures that the Federal Reserve 


Jank may take to raise or lower the 
uantity of money available to banks, 
nd thus to businessmen and consumers, 
'iscal policy refers to the manipulation 
f Federal spending and taxation for 
conomic purposes. To restrain the cur- 
ent inflation, until recently the govern- 
nent has relied almost entirely upon a 
imited use of monetary policy. 

Combined with the strong demand for 
unds within the economy, the use of 
nonetary policy by the Federal Reserve 
Board to curb inflation has been felt 
severely in the business world. Interest 
ates for most kinds of loans are the 
lighest since the 1920's and in some 
ireas, loans are difficult to get. On a 
'ecent bond issue, for example, AT&T 
lad to pay over 51/2 per cent interest, 
he highest rate since 1923, and Bell 
System operating companies have had to 
oay even more. 

' The home building industry has been 
nardest hit by the tight money situation. 
\s interest rates for mortgages have gone 
up, construction expenditures and home 
'building have gone down. Builders are 
finding it difficult to obtain construction 
loans and to get commitments for mort- 
gages for buyers. Besides high interest 
rates, home buyers have to cope with 
liigh mortgage placement charges, and 
'points, a fee that discount buyers pay 
lerxders for low-interest loans. 

By making money more difficult and 
expensive to borrow, a tight money policy 
slows or holds back investment and pro- 
duction and thereby dampens inflation. 

The New Economics 

The goverrmnent's other major wcajion 
is fiscal policy, and this involves a num- 
ber of alternatives within the confines of 
"The New Economics" — a complex of 
economic theories based on the work of 
the English economist, John Maynard 

The New Economics maintains that 
tax changes and the rate of government 

spending provide rapid and efficient 
means of altering the nation's economic 
course. In boomtimes, the government 
can slow inflationary trends by increas- 
ing taxes and cutting govenunent spend- 
ing, taking money out of the hands of 
consumers and corporations. In a reces- 
sion the economy can be perked up by 
cutting taxes and increasing public 
spending. Tax increases are also flexible 
in that they can be across-the-board 
increases, or more selective increases 
aimed at one segment of the economy. 

One example of a selective increase is 
the suspension of the seven per cent 
investment tax credit on business. This 
tax provision has allowed non-regulated 
companies a credit against taxes equal 
to seven per cent of new investment. 
( Utilities are allowed a basic rate of 
three per cent. ) Suspending it would 
contribute to slowing business invest- 
ment, a segment of the present inflation 
some economists view as the most out 
of control. However, a general increase 
in corporate and personal incomes taxes 
is favored by some economists and busi- 
nessmen and might be voted next year. 

Fiscal policy also involves federal 
spending: another way to fight inflation 
is to cut overall government expendi- 
tures. With the war in Vietnam heating 
up, this possibility seems rather remote. 
However, there is pressure to cut back 



on non-essential domestic spending, even 
though non-defense spending cutbacks 
and a general tax increase carry heavy 
political penalties, particularly in an elec- 
tion year. 

Speaking before the House Ways and 
Means Committee on the proposed sus- 
pension of the investment tax credit, 
AT&T Board Chairman Frederick R. 
Kappel said: ". . . as one businessman 
who has a sincere interest in seeing that 
the country has the economic good health 
to serve the best interests of all, I ap- 
plaud the President for taking positive 
and immediate steps to moderate the 
pressures on costs, the availability of 
money and the resulting inflation that is 
now with us. ... I would suggest that the 
overriding importance of prompt and 
meaningful reduction in government ex- 
penditures and appropriations cannot be 
overemphasized. . . . To my mind this is 
essential to impress upon all segments 
of our economy — government, labor, busi- 
ness, and the consuming public — the 
imperative need for voluntary restraints 
upon their own respective economic acti- 
vities and demands. All segments of the 
national community must become deeply 
involved in this undertaking. No single 
segment can do it alone." 

More Drastic Less 
Palatable Measures 

More drastic to the economy would be 
actual wage-price controls, as were used 
during World War II and the Korean 
War. While this remedy will probably 
not be applied — because of the severe 
distortions which it tends to create within 
the economy over time — it might have to 
be used if the conflict in Vietnam were 
enlarged to a great extent. 

Finally, another possible measure to 
halt inflation would involve national 
legislation calling for compulsory govern- 
ment arbitration of certain strikes inimi- 
cal to the national interest. Theoretically, 
this would include recent labor battles 
which notably smashed the guideposts. 

Public discontent over lengthy strife^ 
coupled with rising prices, could maj 
such compulsory arbitration a reality ;- 
though it would strike a blow at or 
concept of a free economy and migt 
lead to more serious problems later o. 

The business world looks at the curre; 
inflation with all these causes and pc 
sible remedies in mind. It also has otb' 
inflationary problems to worry abou 
depreciation, investment and constru 
tion, stocks and bonds, and rising pricf 
and labor costs. These problems weig 
especially heavily on regulated indu 
tries, which generally have huge inves 
ments in plant and equipment, and whic 
find it more difficult to react quickly t 
the many effects of rising costs. 

First of all, inflation hits hard a 
investment and depreciation by makin 
it impossible for a business to recove 
the true costs of the assets it uses up h 
the course of its business. Dr. Bach toli 
the FCC that: "During inflation, busines 
depreciation charges based on historica 
original cost fail to recover for asse 
owners the value of the assets used ui 
in terms of current purchasing power 
Thus, inflation may lead to a statemen 
of accounting profits which are largei 
than 'real' profits, in economic terms 
and an adjustment should be made or 
accounting profits in making net incomt 
comparisons among economic groups . . . 
Use of depreciation formulae based solely 
on historical original cost dollars will 
fail to recover the full investment in the 
asset in current dollars during inflation 
.... If a company invests 100 cent dollars 
and recovers later only an equal number 
of 75 cent dollars, it has lost a quarter 
of its real capital, even though in dollar 
terms the depreciation shows a full re- 

Therefore, the steady inflation in the 
years since World War II, Dr. Bach said, 
has clearly led to massive underbooking 
of real depreciation. Because of the rise 
in costs during inflationary periods, regu- 
lated firms must look particularly hard 


»!jr ways to cut costs since they are con- 
tltrained in adjusting prices upwards by 
'isgulatory lag, and are thus denied the 
' iiajor escape valve available to other 
krms. Dr. Bach concluded that inflation 
' ihould be recognized by Federal and state 
legulatory authorities on grounds of both 
.quity to stockholders and economic 

Because of the involvement of Federal 
.nonetary and fiscal policy in inflation, 
jie said, it is especially appropriate that 
;<"ederal regulatory authorities should 
^nake an allowance for inflation in their 
reatment of regulated industries. Bas- 
ically, this should consist of an "allow- 
ince of actual user costs by computing 
lepreciation charges on the basis of cur- 
rent dollars rather than historical dollars 
Old recognition of current dollar costs 
n the rate base . . . ." 

Aside from the main problems of in- 
/estment and depreciation policies and 
.ising costs, inflation also upsets other 
acets of the business world. For example, 
,:he current tight money situation makes 
t more difficult to raise capital and has 
iriven up interest, or the cost of money. 

In the eyes of some analysts, this has 
made bonds more attractive than stocks 
to many holders of large portfolios, and 
has contributed to the current general 
decline in the stock market. This has an 
immediate impact on a business's financ- 
ing plans — for example, whether it will 
offer shares or issue bonds to raise money 
for investment — and the price it will have 
to pay for the new capital. 

Thus, like all businesses, the Bell Sys- 
tem faces the realities of the current in- 
flation — rising costs for materials and 
equipment, higher wages for employees, 
a tight money market and inadequate 
depreciation. Besides continuing cost re- 
duction efforts, the Bell System is taking 
a careful look at its overall construction 
expenditures to make sure they are used 
as effectively as possible to meet the 
needs of our customers without adding 
unnecessarily to inflationary pressures. 

President Johnson has called inflation 
"the most unjust and capricious form of 
taxation," and as such, it is the respon- 
sibility of all — consumers, businessmen 
and politicians — to do all they can to 
combat it. 



All businesses need quality controls, 
but a service industry requires a special kind to provide 



' hen a person buys a new television 
set, a washing machine or an automobile, 
he expects he will get reasonably trouble- 
free performance. Part of the reason he 
has such an expectation is that the manu- 
facturers have applied a number of 
measurements— quality controls— to de- 
termine whether the products they pro- 
duce meet standards of quality and 
performance. But what about a service 
industry? How does it determine whether 
the service it provides measures up to its 
own standards and the expectations of 
its customers? 

This question has been a concern of 
the Bell System since the early days of 
the business. The problem is especially 


difficult in the communications busine 
because of the large number of relative; 
brief over-the-telephone contacts wit 

Over the years, the Bell System hi 
developed a variety of measurements t 
determine how well operating units ai 
meeting both our own standards and th 
needs of our customers. These measure 
ments fall into two general categories 
external surveys such as the Service Ai 
titude Measurement program (see BTM 
Summer 1966), which help determin 
customers' opinion of our service am 
their attitude toward the company, an( 
internal observations of employee an( 
equipment performance. 

These internal measurements date 
lack to just after the turn of the century 
nd have been responsible for a host 
f improvements in service: better trans- 
lission, fewer cut-offs and interruptions, 
nd more pleasant and faster service. 
\' Over the years as communications 
jchnology has improved, there has been 

growing use of highly technical sophis- 
cated equipment, much of which has 
s own built-in quality control devices. 
Ijid in some cases where individuals 
lere once required to check equipment 
erformance, mechanical means have 
jeen found to do what people used to do. 
I Despite rapid technical strides, tele- 
jhone people have not been able to de- 
elop a means by which mechanical 
equipment can evaluate the way an oper- 
tor, for example, handles a long distance 
all for a customer or a service repre- 
entative takes an order for new tele- 
hone service. Only a competent, highly 
rained individual can determine if the 
mployee is pleasant, helpful, efficient 
nd attentive in her dealings with a 
ustomer. An individual must provide the 
iiunan measure. 

Although the manner in which a spe- 
iiic customer is treated is important, serv- 
36 observers are not concerned with the 
lerformance of an individual employee, 
nstead, service observing seeks to de- 
ermine the level of the service provided 
:;iy an entire work unit so training pro- 
;Tams, equipment re-arrangements, and 
•!iew procedures can be developed to im- 
irove the over-all level of service. 

A sampling of the way in which opera- 
lors handle calls to Information indicated 
1 few years ago that operators were still 
lommitting faults such as giving out in- 
:orrect numbers, ignoring pertinent de- 
ails, and interrupting customers. 

With such specific information at hand, 
'upervisors were able to develop training 
•ind motivational programs to improve 
jperator techniques and work habits. In 
iddition improvements were made in the 
ormat of the Information records so 
)perators could more quickly and accu- 

rately locate nvimbers. As a result the 
level of unsatisfactory service dropped by 

In one Bell System office where service 
observing was discontinued because of 
equipment modification work, the lack of 
quality control was sharply felt. When 
service observing was resumed it became 
apparent that the quality of service that 
customers were getting had deteriorated 
during the six-month lapse. With the 
data obtained from renewed observing, 
weaknesses in the performance of the 
work group were identified, corrective 
action was taken, and within a few 
months, the quality of service returned 
to the previous high performance levels. 
The wide variety of the types of calls 
handled also makes it necessary to have 
some means to pinpoint weak areas so 
programs can be directed at their im- 

The need to obtain specific indications 
of the job being done was pointed up in 
1964 when calls to operators from coin 
telephones were first observed as a sepa- 
rate item. Although the level of operator 
answering speed overall was good, observ- 
ing indicated that the speed with which 
operators answered calls from coin tele- 
phones was below satisfactory levels. An 
analysis of the data showed that opera- 
tors needed special training in handling 
coin telephone calls, and force and equip- 
ment adjustments were needed. As a 
result, the average time it takes an 
operator to answer a call from a coin tele- 
phone has been almost cut in half during 
the past two and one-half years. 

Such are the typical benefits of a com- 
prehensive quality control program in an 
industry that has tens of thousands of 
people and huge quantities of equipment 
handling the personal requests of cus- 
tomers. Service observing is the manage- 
ment tool that measures the functioning 
of our facilities and — uniquely and im- 
portantly—gauges the kind of personal 
service telephone people give. It's the 
human measure of quality, which only an 
individual can provide. 


Bell Labs Symposium 

TWX Rate Changes 


Services for Handi- 

CCSA Triple Cut 

Chicago-Denver Cable 

A BTL Symposium 

g A two-day symposium, "The Humi 
Use of Computing Machines," was cc- 
ducted by Bell Laboratories this summer 1- 
some 260 members of the scientific and ac 
demic communities. The symposium w; 
arranged in order to make available to the 
communities an accumulation of knowledi 
and experience in the development of cor 
puter technology resulting from communic 
tions research. 

Computers have wide-spread applicatic 
in research which requires close and freque, 
dialogue between man and machine; B< 
Laboratories, which has participated in tf 
development of both digital and analog con 
puters, has developed and uses technique 
which enable man to work closely and con 
municate with computers. Many of thej 
methods have general application in a nun 
ber of fields; hence, the symposium wa 
intended for those who wanted to appi 
computers to problems in their special field: 
rather than those interested in computers a 

The guests, predominantly college an^ 
university professors, came from across th 
U.S. and Canada and represented such d 
verse fields as business administration 
English, engineering, medicine, psychology 
humanities, physics and music, in additioi 
to the computer field. There were also guest' 
from such federal agencies as the Nationa 
Science Foundation and the Smithsoniai 

Bell Labs scientists and engineers pre 
sented eleven papers during the symposium 
subtitled "A Symposium Concerned wItt 
Diverse Ways of Enhancing Perception ant 
Intuition." The program demonstrated some 
of the many applications of computing 
machines which are being carried out at Bel 
Laboratories. It showed how more effective 
communication between people and comput 
ers can be achieved by developing special 
computer languages and by attaching spe 
cial devices to computers. 

The papers illustrated various aspects o1 
the revolution in computer technology and 
philosophy. The applications described in- 
cluded: design of electronic circuits, editing 
and typesetting of text, production of sounds 


id pictures for psychological experiments, 
jeech research, carrying out of routine 
mathematical manipulations, and display of 
aphic output for educational films and 
:her purposes. 

' Bell Laboratories people presented evi- 
snce that computers are at last feasible for 
'se by people who are not specialized in 
'jmputer technology. The digital computer 
'as demonstrated as a realistic tool for use 
1 a rapidly widening range of investigations, 
gain with significant reductions in the ex- 
ertise required of the user. 

Until now, computers have not been fully 
'xploited because only computer experts 
'ere able to control them. Even expert com- 
uter programmers have had difficulty in 
'ying to apply the computer to activities 
eople can carry out with ease. This dilemma 
'; rapidly diminishing, largely because the 
cientist or engineer is now better able to 
ommunicate with the computer. This im- 
roved communication is possible because 
ew languages for giving instructions to the 
omputer have been developed which enable 
fficient programs to be written for a wide 
'ariety of special problems. 

The computer is now not only responsive 
'd conventional punched cards and tape, but 
D the turning of knobs, instructions of light 

Manfred R. Schroeder of Bell Labs, at right. 
'OS impromptu discussion during symposium. 

pens, and signals from experimental appara- 
tus. And computer results are displayed in 
ways more easily assimilated by human oper- 
ators, through the use of graphs, audible re- 
sponses, charts and motion pictures. 

The evidence indicated that the term 
"computer" has become a misnomer. The 
hardware it describes is no longer merely 
a gigantic arithmetic machine because new 
computer software (computer programs or 
languages) has been developed and because 
a wide variety of electronic equipment can 
be attached directly to the computer. For 
example, with more advanced software and 
hardware attachments, the computer can 
now find hidden insights in complex data and 
display them. It can draw charts and graphs 
from the data and manipulate symbolic 
algebra. It can synthesize delicate subtelties 
of speech and repeat them for language 
studies. It can use a carefully constructed 
form of the English language — with the po- 
tentiality of analyzing text. It can also gen- 
erate stereo movies. 

In his closing remarks, W.O. Baker, vice 
president of Research and Patents, stated 
that ". . . our nation, and to some degree 
mankind altogether, have become trustees for 
one of the heroic capabilities so far evolved 
from science and engineering — that of the 
giant computing machine and its associated 
networks of interactions and man-machine 

"We believe that you are the ones who, 
especially in your cardinal roles of organizing 
and transferring all the realms of human 
knowledge through education, can best see 
the vast meanings of these machine aids to 
logic and reason, to the processing of great 
volumes of coded information — aids to per- 
ception, to display, to creativity itself. 

". . . The basic thrust of the small but sym- 
bolic sampling of progress that we have been 
able to discuss during this symposium . . . can 
be realized only by the schools and colleges 
and universities of this nation becoming the 
forewave of the new tide of learning, in which 
computing machines will be known and per- 
haps accessible to most of the faculties and 
students in our land. This is probably the 
greatest single step ahead that education and 
scholarship could take in our time." 


New TWX Rates 

m A new one-minute minimum rate sched- 
ule for users of Teletypewriter Exchange 
Service (TWX) went into effect September 1 
under tariffs filed with the FCC. The changes 
include revised monthly rates for basic serv- 
ice and will result In increased charges in 
some cases and decreases or no changes in 
other cases. In authorizing the new rates, the 
FCC deferred a final decision in the TWX 
case, which has been on the docket since 
November 1964, and consolidated it with 
the general rate investigation of Bell System 
interstate services. 

The one-minute minimum period, which 
will mean savings for many TWX customers 
who send short messages, reflects the chang- 
ing use of TWX. Business machines and data 
processing equipment now generate and 
interpret many of the messages. According 
to a Bell System study, about half of today's 
TWX traffic consists of messages less than 
three minutes duration. There also is an 
increasing use of faster teletypewriters which 
can send 100 words a minute, as compared 
with older equipment with a capacity for 
60 words a minute. The new rates are ex- 
pected to cause a shift in equipment demand 
to the newer, faster models. 

Under the revised schedules for basic 
monthly rates, customers will pay $45 per 
month for the 100-word per minute service 
using a keyboard sending and receiving tele- 
typewriter. They will pay $60 per month for 
100-word per minute service using an auto- 
matic sending and receiving teletypewriter. 
The monthly rate for 60-word per minute 
service for stations equipped with a basic key- 
board sending and receiving teletypewriter 
will be $40. 

In another development pertaining to Bell 
System services for large business users, 
AT&T has announced that it will not appeal 
the U.S. Circuit Court of Appeals ruling that 
upheld the FCC's order on Telpak. The order 
was taken to court by AT&T and eight other 

This means that Telpak A and B offerings, 
which were found to be not competitively 
justified, must be withdrawn and "unified" 
with other private-line rates. AT&T must also 
submit for Telpak C and D additional cost 

data and such revised tariff schedules s 
may be indicated by this data. The FCC hj 
held that Telpak C and D were justified y 
competitive necessity but that they wij 
unable to determine whether or not the rals 
were compensatory. AT&T expects that co- 
pliance with the orders will involve increas; 
in charges for most Telpak customers. 

Caribbean Communications 

m Within the last few months there ha> 

been a number of developments to he 

serve the rapid growth in the demand f 

communications to points in the Caribbea 

Direct customer dialing of telephone cai 
between the United States and the Virg 
Islands was formally inaugurated on Septer 
ber 19 by AT&T and the Virgin Islands Tel 
phone Corporation. The improved service w 
enable telephone customers in the confine 
tal U.S. and on the islands of St. Thoma 
St. Croix and St. John to dial one anoth( 

This step marks the first time that U.! 
mainland customers are able to dial direct 
to an overseas telephone. With the introdU( 
tion of the service, the Virgin Islands con 
pany became the first telephone firm abroa 
to initiate DDD service to the States. 

Venezuelan workman icinuvcs float from ne\s 
sithmarlne cable as C.S. Alert stands by. 


In other developments, AT&T has an- 
'Dunced new cable and radio facilities to 
iprove telephone communications to several 
'aribbean points. The facilities provide 11 
'jditional direct circuits between the U.S. 
id Barbados, six more direct circuits to 
'ntigua, and two additional ones to Trinidad. 
1 addition, the system, which represents an 
nportant addition to the growing network of 
icilities designed to assure the dependability 
nd diversity of communications in the 
'aribbean, gives improved service through 
Dnnecting facilities to Grenada, Tortola, 
lontserrat, Dominica, and St. Lucia, St. 
'incent and St. Kitts. The facilities include 
n underwater cable between Bermuda and 
'ortola and an over-the-horizon radio system 
'om Tortola to Trinidad, which have been 
onstructed by Cable and Wireless (West 
'idies) Ltd. 

Earlier In August, a new cable was opened 
'etween St. Thomas in the Virgin Islands 
nd Venezuela. Tied in with the U.S. -Virgin 
;lands cable, it completed the first telephone 
'able link between North and South America 
■see BTM, Su. 66). In addition, AT&T has 
'ending before the FCC a proposal to lay a 
luper-capacity 720-circuit undersea cable 
etween Florida and St. Thomas. 

•ervices for Handicapped 

■ Under a research agreement between 
New York University and AT&T, the 
nstitute of Physical Medicine and Rehabilita- 
of the New York University-Bellevue 
ledical Center has been studying the tele- 
ihone needs of amputees and people hand!- 
apped by paralysis, muscular dystrophy, 
rthritis. Parkinsonism and other motion 
Usabilities. This research project, which was 
have been completed last June 30, has 
leen extended until next June 30, in order 
o study more patients in a number of dis- 
ibility categories and to prepare more au- 
Ihoritative recommendations for physicians, 
herapists, patients and telephone people 
:oncerned with providing service for the 
[landicapped. Funds for the project are 
Provided by a Bell System grant. 

Initial results of the study, which is part 
if an overall Bell System program to provide 

special services for the handicapped, show 
that most motion handicapped people can 
be helped by the use of existing — or slightly 
modified — Bell System products and services. 
Touch-Tone? dialing, for example, has been 
found to be ideal for all but the most severely 
disabled. Speakerphones and telephones 
equipped with a jack and headset also have 
wide applications. 

Besides studying the application of exist- 
ing services, the Institute will also try to 
determine gaps in the Bell System product 
line and recommend new equipment that 
would help meet the needs of motion handi- 
capped customers. Results of the study are 
intended to help the Bell System meet the 
communications needs of many of the 25 
million handicapped persons in the U.S. In 
addition, the Associated Companies are en- 
gaged in a program to make Bell System 
services known and available to customers 
with hearing and speech handicaps. 

Triple Cut to CCSA 

H Three large companies, with a total of 
130,000 telephones, have recently in- 
augurated CCSA — Common Control Switching 
Arrangement: Westinghouse, Western Elec- 
tric, and Boeing. 

CCSA is an efficient and economical pri- 
vate-line communications system for large 
companies with offices scattered throughout 
the country. Under the system, an employee 
in a company can call another employee in 
a distant city by dialing only an access code 
and seven digits. This direct dialing feature 
brings about a dramatic savings in time over 
operator-controlled private-line systems. 

With CCSA, most extension users have 
direct dialing access both to their companies' 
internal network and to the nationwide net- 
work. The systems also have the ability to 
transmit data communications similar to the 
regular DDD network. 

The Westinghouse system, dubbed WIN 
for Westinghouse Information Network, con- 
nects some 30.000 extension users in about 
500 locations. Calls pass through six major 
switching machines using over 700,000 miles 
of circuits with terminations in 33 states and 


involving all Bell System Companies and 13 
independent companies. Boeing's CCSA sys- 
tem unifies the aircraft manufacturer's 
25,000 phones at some 25 locations. 

The Western Electric system, called 
CORNET for Corporate Network, consists of 
75,000 extension users at 105 locations in 
73 cities. The network interconnects 86 W.E. 
locations — including distributing houses, 
manufacturing locations, regional headquar- 
ters and most installation offices — 17 Bell 
Laboratories locations, and two locations of 
the Teletype Corporation, a subsidiary of 
W.E. For incoming calls, it also includes Long 
Lines Department and AT&T headquarters in 
New York City. 

The work behind the three cutovers was 
a team effort involving the Long Lines De- 
partment, all Bell operating companies, inde- 
pendent telephone companies, and Western 

The advantages of a CCSA system are 
rapidly gaining acceptance from many large 
companies. Present customers include the 
Federal government through its Federal Tele- 
communications System (FTS) and Automatic 
Voice Network (AUTOVON) (see p. 18); 
American Airlines, General Electric, Lockheed 
and the New York Central Railroad. By 1970, 
over 60 customers are expected to have 
common control switching systems. 

Chicago-Denver Cable 

B Plans for a 61.3 million dollar blast- 
resistant telephone cable between Chi- 
cago and Denver have been announced by 

When in full operation in 1969, the cable 
will add 32,400 voice-grade circuits — tun- 
neled through 20 pencil-thin coaxial tubes — 
to the Bell System's telephone network. All 
cable, communications centers, power and 
amplifying stations will be underground and 
engineered to withstand natural disasters — 
blizzards, tornadoes, hurricanes — and nuclear 
blasts short of a direct hit. 

The route extends 1,200 miles from Piano, 
III., near Chicago, to Longmont, Colo., with 
cable legs into North Bend, Neb., and Den- 
ver. It avoids large cities and major target 
areas and will pass through five states: Illi- 

nois, Iowa, Nebraska, Wyoming and Coloraii. 

At Piano, the cable will be joined toa 
coaxial cable from Chesterfield, Mass. j 
Chicago, which opened earlier this year. Eve- 
tually, the route will be extended to Oaklat, 
Calif., giving the Bell System a second bla- 
resistant transcontinental communicatio; 
route. The first such route was placed i 
operation in December 1964. Existing fac- 
ties between Chicago and Denver will ; 
operating at maximum capacity within thr' 
years; the new route will provide urgeni' 
needed circuits and will help insure con 
nuity and survivability of communications. 

The cable will be buried four feet dei 
with nearly 600 auxiliary amplifier statioi 
and 11 main centers strung along the rout 
The main centers will be two and three-sto 
buildings of heavily reinforced concrete e 
tirely underground. In emergencies, the ce 
ters will be able to generate their own powi 
and provide living quarters, food and wati 
to operate during adverse conditions for ; 
least three weeks. 

Computer-PHOTAC Trial 

W The New York Telephone Company an 
Western Electric have reported succes: 
ful rjsults of a trial in which they applie 
computers and phototypesettingcomposin 
(PHOTAC) equipment to the production c 
white pages of telephone directories an 
Traffic Information records. The trial, whic 
started in 1962, demonstrated that compui 
ers and PHOTAC equipment could accuratel 
maintain and update records of customers 
listings; abbreviate, alphabetize, position in 
dents, justify lines, and compose columns t 
and pages according to specifications; an(| ; 
activate a phototypesetter and composer tc : 
produce films and plates of pages from which J 
directories and information records could b( I 
printed. I 

The system provides the flexibility t( ■ 
change the format, scope, content and typ$ 
size of directories or information records, and 
improved accuracy resulting from the effii : 
ciencies of one skeletonized input for updat i 
ing all records — white pages. Traffic records, 
delivery records and Yellow Pages advertising. 
In addition, the system is compatible with 


:he planned structure of Bell System bus!- 
less information systems and permits sav- 
ngs in directory and printing expense. 
: The New York Telephone Company is plan- 
ning to convert all directory operations to 
shis system by 1972. The computer programs 
mave been made available to the other Bell 
iSystem companies. 
Iw. E. College Gifts 

.■ Western Electric's College Gift Program, 
now in its 39th year, will distribute 
)ver 500,000 surplus items to more than 
100 colleges and universities this year. Unique 
or U.S. industry in size and scope, the gift 
orogram donates items such as resistors, 
ransistors and oscilloscopes for use in engi- 
leering and scientific laboratories of colleges 
ind universities. The purpose of the program 
s to strengthen education and increase 
scientific research. 

■ Although the surplus or obsolete items 
nay not be worth much to W.E., they are 
jften an invaluable aid to the students and 
jrofessors in the college laboratories. 
Throughout the year. Western Electric's Col- 
ege Gift representatives select suitable mate- 
"ials that are slated to be discarded. The 
tems are assigned to one of 11 special 
'itorerooms where they are classified. A com- 
Dlete catalog that lists all available materials 
's sent annually to about 750 science and 
;ngineering departments of educational in- 

Elon College president reviews special 
gift allocation with W.E. executive, left. 

situations around the nation. This year's 
catalog runs 69 pages and lists 1,885 items. 

The program started modestly when 18 
surplus oscilloscopes were donated to several 
northeastern schools. Today it has grown to 
the point where the law of supply and de- 
mand makes it difficult to include additional 
colleges and universities in the program. 

W.E. contributions also meet certain spe- 
cial needs. For example, this summer a 
special allocation outside the regular College 
Gift distribution program was made when 
Elon College in North Carolina lost much of 
its laboratory equipment in a fire. Since 
commercially ordered replacement material 
could not have been delivered by the start 
of the fall semester, W.E. donated 108 pieces 
of scientific equipment. 

Pacific Cables 

M The last decade has seen a communi- 
cations explosion in the Pacific. The 
boom was touched off in 1957 when AT&T 
laid its first underseas cable between Cali- 
fornia and Hawaii and has mushroomed with 
each improvement in Pacific communications 

AT&T, in partnership with other communi- 
cations companies and foreign nations, fol- 
lowed up its first Hawaiian cable project in 
1964 when it installed cables to Japan, the 
Philippines, and a second cable from Cali- 
fornia to Hawaii. In addition, AT&T also 
acquired circuits in the COMPAC and SEA- 
COM cable systems built by British Com- 
monwealth nations. 

Sharp increases in the volume of mes- 
sages between the U.S. and Pacific points 
have resulted from the improvements. U.S.- 
Pacific messages totaled 1.2 million in 1964. 
climbed to 1.8 million in 1965, and are ex- 
pected to exceed two million in 1966. 

In each case where a cable has been 
opened, the number of messages between 
the U.S. and the overseas point has tripled 
within a short time. In 1963, for example, 
there were 86,000 messages a year between 
the U.S. and Japan. The following year, with 
the opening of the cable, the figure rose to 
145,000 and increased to 218,500 at the 
end of 1965. Telephone messages between 


the U.S. and the Philippines reached 95,000 
during 1965, more than three times the 
total in 1964; in December of that year a 
cable was opened to the Philippines via 

AT&T expects similar increases to occur 
In the flow of messages between the U.S. 
and Southeast Asian countries as a result 
of the opening in August of the SEACOM 
cable, providing the first direct cable link 
between the U.S. and the Southeast Asia 
area. AT&T has acquired 15 circuits which 
will serve Hong Kong, Singapore and Kuala 
Lumpur, the capital of Malaysia. AT&T will 
also acquire circuits in the Guam-Madang- 
Australia portion of the SEACOM system 
when it is placed in service early next year. 

At present, AT&T has no plans for addi- 
tional cable facilities in the Pacific area. In 
stead, it hopes to utilize 20 to 25 circuits in 
the new satellite which Comsat plans to loft 
later this year over the Pacific in connection 
with the Apollo manned flight project. 

Coin Service Trial 

H Coin telephones which tell the user that 
the phone is working and permit him to 
dial the operator without depositing a coin 
were introduced on a trial basis in August. 
Part of the Bell System's coin telephone 
service improvement program, the "dial-tone 
first" concept is being tested initially in 
Hartford, Conn. 

In the Hartford trial, the coin telephone 
caller knows immediately that the phone is 
working when he lifts the receiver and hears 
the dial tone. He then inserts the money as 

To obtain the assistance of an operator, 
the caller dials "0" without inserting a coin. 
Local emergency calls, such as calls to the 
police or fire department, are put through by 
the operator at no charge. Only calls to the 
operator can be dialed without a coin. 

The trial, which required modification of 
phones and central office equipment, is 
limited to outdoor public coin telephones. 
Trial objectives are to determine the extent 
of service improvements to the customer, 
customer reaction, instruction requirements 
and the effect on telephone company opera- 

tions. Other trials of the services are 

Southeast Asia Assignment 

JU At the request of the Defense Cfn 
munications Agency, the Western Esc 
trie Company has undertaken a systems in 
gineering study of defense communicatns 
facilities on the Southeast Asia mainland, he 
work will require W.E. to recommend immJi 
ate service improvements and to draw u a 
long term engineering and operating plan f a 
fully integrated system in Southeast Asia. 

People from the Bell Operating Compaijs 
will work with W.E. in varying assignmeis, 
some at project sites in Vietnam or Thailid 
and others in Washington, D.C. 

Mercury Memo System 

■j Mercury, the immortal messenger, Is 
traded his old-fashioned sandals foia 
computer. Mercury is Bell Telephone Laboi- 
tories' computer-aided system which currery 
distributes technical memoranda on mat^!- 
matics and the computing and informatii 
sciences. Eventually, the system will exteJ 
to other subject areas. 

The Mercury system, which was conceivi 
by J.F. Traub and W.S. Brown, members f 
BTL's Mathematics and Statistics Researi 
Center, enables any employee to recei; 
promptly new memoranda written by spe 
fied authors or departments. Requests a 
made on a brief form and channeled to tl 
center of the system, which is operated I 
the Technical Information Libraries. 

The system also distributes memorant 
not specifically requested by users but per 
nent to their stipulated areas of interest • 
enable readers to keep abreast of new dev£ 
opments. Authors can command distributic 
not only to specific readers and organizi 
tions, but to any employee who has indicate 
interest in a subject. 

Vital to the flexibility and growth of th 
system is the Mercury Thesaurus, writte 
by Mr. Traub. It is a short, structured vocat 
ulary of the mnemonic codes used for eac 
subject. Authors and readers use it whe 
specifying subjects wanted for distribution. 


* From the point of view of IVlercury users, 
lie system centralizes and expedites dis- 
Lmination of information. It also affords 
'ipid transfer of memoranda from authors to 
readership which formerly was only poten- 
'' ally within reach. 

'«teliability Testing 

';■ Western Electric squeezes years into 
"^ minutes to produce durable telephones 
!')r the Bell System. This compression of 
"me is done in the Performance and Reliabil- 
' y Laboratory at W.E.'s Indianapolis Works 
'||,here facilities are designed to give tele- 
'hone equipment such a rough ride in a 
'''hort time that it will equal long periods of 
ormal use. 

The testing gives Western engineers rea- 
onable insight into how a mechanism will 
erform, say 15 or 20 years hence, the nor- 
'lial service life of a phone. 

• In another phase of testing done by the 
'■''&R Laboratory, problems of environment 
'Ire re-created to determine how telephones 
It /ill function when exposed to the saltiness 

• f coastal living, or the extremes of tempera- 

■ ures from the Dakotas to Florida. 

All designs of new models, ideas for ad- 
I'iance product development and cost reduc- 
< ion are put through an exhaustive series of 
I 'tandardized and improvised tests conceived 

■ it the laboratory. Only the best survive. 

' Set off from the cadence of telephone 
Production, the P&R Lab consists of two 
l,potless, air-conditioned rooms where relative 
humidity is kept at 50 per cent. 

The lab is a veritable side-show. A "drop 

' test" mechanism, which resembles a guillo- 

: line, simulates the stress on a phone acci- 
dentally dropped from a desk or table-top. 
i\nother machine removes and hangs up re- 
f:eivers to subject equipment to the rigors 

; bf accelerated time involving several hundred 
ithousand repetitive operations. Another 
unique apparatus which looks something like 
a wheelbarrow simultaneously drives several 
itelephone dials to failure; it usually takes a 
couple of million rotations — the equivalent of 
:about 160 years of average use. 

Two eraser tipped poles operated by 
compressed air, which makes them sound 

Whcelbanow-like device tests phone dials. 

like a toy steam locomotive, perform a life 
test of the recall button on the Trimline'5 
phone. The button, built into the phone's re- 
ceiver, permits a conversation to be ended 
without depression of the switchook. Failure 
usually occurs after 100,000 depressions. 

Sheltered from these sounds are about 
100 square feet of silence: the quiet room. 
Here, amidst walls of fiberglass wedges that 
consume sound, tests are made that deter- 
mine the audio qualities of buzzers, ringers 
and gongs used with the telephone. 

Other test apparatus includes a tempera- 
ture-humidity chamber where telephones are 
exposed to temperatures ranging from 60 de- 
grees below zero to 160 degrees above zero 
at a relative humidity exceeding 90 per cent. 
A corrosion test cabinet gives a telephone a 
24 hour salt spray bath equivalent to 20 
years of continuous exposure in a typical 
salt fog atmosphere much like that found in 
coastal regions. There is even a transporta- 
tion simulator that subjects telephones in 
cartons to the knocks they are likely to re- 
ceive during transportation. 

The end result means telephones that defy 
both time and environment. 


American Academy Honors 

m Edward E. David, Executive Director of 
the Research Communications Systems 
Division at Bell Laboratories, recently be- 
came the twelfth Bell Labs person to be 
elected a Fellow of the American Academy 
of Arts and Sciences, one of America's oldest 
honor societies. That number is by far the 
largest representation from any one industry. 
David was one of 150 Fellows and Foreign 
Honorary Members elected at the Academy's 
186th Annual Meeting. Among the new mem- 
bers were such diverse personalities as civil 
rights leader Martin Luther King, Jr., polio 
vaccine discoverer Dr. Jonas E. Salk, historian 
Bruce Catton, novelist J.D. Salinger, presi- 
dent of the Soviet Academy of Sciences 
M.V. Keldysh, and General Electric president 
Chauncey Guy Suits. Members are chosen 
from among those who are "eminent for 
their discoveries or attainments" in four 
classes: mathematical and physical sciences, 
biological sciences, social arts and sciences, 
and humanities. 

Bell Labs people previously elected are 
President James B. Fisk; retired President 
Mervin J. Kelly; Research Vice President Wil- 
liam O. Baker; Military Systems Engineering 
Vice President Hendrick W. Bode; Executive 
Director John R. Pierce and Associate Execu- 
tive Director John W. Tukey. Other BTL mem- 
bers include Walter H. Brattain of the Sur- 
face and Atomic Physics Research Depart 
ment; Conyers Herring of the Theoretical 
Physics Research Department; Bernd T. 
Matthias of the Solid State and Low Tempera- 
ture Physics Research Department; Executive 
Consultant William Shockley, and Mathe- 
matical Consultant Claude E. Shannon. 

Arches of Science Award 

^ Dr. Rene Dubos, a microbiologist ,id 
experimental pathologist with the Roce- 
feller University, has been named as e 
winner of the Arches of Science Award )f 
the Pacific Science Center. The award, nand 
for the five distinctive arches which s(r 
above the Seattle science institution, carr; 
a cash prize of $25,000 and a gold medal. 
Sometimes called the "American Noll 
Prize," the award is sponsored by the Paci: 
Science Center Foundation, a nonprc: 
agency of business, scientific and education 
leaders in the Pacific Northwest, and ma- 
possible by grants from the business cor 
munity of the Northwest, most notably PacH 
Northwest Bell Telephone Company. 

In his citation of Dr. Dubos at the a 
nouncement ceremonies. Dr. Dael Wolfl 
chairman of the Arches of Science awai 
committee and executive officer of the Amet 
can Association for the Advancement c 
Science, noted that "the contributions he ha 
made to the better understanding of th 
meaning of science have spanned man 
years." The citation stated that "he has dis 
tinguished himself by helping man to under 
stand more deeply the fundamental meanini 
of scientific activity and to appreciate mori 
fully and more accurately the changes ir 
human society that are resulting from scien 
tific knowledge and the relation of science tc 
other aspects of man's life and culture." 

Dr. Dubos, widely known as an author and 
lecturer, first demonstrated the feasibility of 
developing germ-fighting drugs from microbes 
more than 20 years ago. Some of his most 
recent work concerns the environmental ef- 
fects which influence human life. 



Somebody loves a loser 

The Bell Telephone Hour has been on 
radio and television for 26 years. In its 
radio heyday, it had as many as 7 million 
listeners on some memorable Monday 

Since moving into television in 1959, it 
has been a shaky performer in Nielsen 
ratings. Last year, v/e averaged 12 mil- 
lion viewers per show — far below the 33 
million average of the top ten network 

Despite our anemic ratings, we hang 
doggedly to the idea that the millions who 
seek fine music and musicianship on TV 
are splendid citizens who make a lot of 
telephone calls, and that The Telephone 
Hour is a good advertising buy for 

This season, we're back again — losinj 
viewers to the Pow! Crunch! Zonk! show 
— with a new musical excursion. Usually 
we'll set forth with mike and camera t( 
involve TV viewers at firsthand in som( 
of the excitement of the music world. Visit 
ing places of musical renown. Filminj 
intimate profiles of great artists at work 
Documenting major musical events, hen 
and abroad. Bringing back 15 hours o 
musical experiences. Perhaps not ever) 
show will be distinguished. But that's wha 
we'll be trying for. 

In the TV ratings race, we may be back 
ing a loser. Whether you're a music buf 
or not, you may find some excitement it 
joining our exploration of the world o 
fine music. Tune in and give it a try. 


^ Bell System 

Librarian. Periodical Dept. 
Kansas City Public Library, 
Kansas City, Mo., 6. 

Bulk Rate 

U.S. Postage 


Hicksville, N.Y. 

Permit No. 473 

January/February 1967 


telephone magazine 



telephone magazine 

Leighton C. Oilman, Editor 
Donald R. Woodford, Managing Editor 
Alix L. L. Ritchie, Associate Editor 
Al Calalano, Art Director 

Frederick R. Kappel, Chairman of tlie Board 
H. I. Romnes, President 
Charles E. Wampler, Secretary 
John |. Scanlon, Treasurer 



Shown on the cover are capsule images (irawn from five of the 
feature articles in this issue. Reading clockwise from the left 
you see A Cable for Growth, the story of the new Boston-Miami 
cable; Wasteland Revisited, an examination of cultural pro- 
gramming on commercial television; Organization Renewal, 
which tells how new management development efforts are 
aimed at the total organization; Communfcat/ons 5a(e///tes, a 
brief description of AT&T's recent proposal to meet mushroom- 
ing communications needs through 1980; and The Campus and 
Business, an insight into young people's attitudes on business. 

2 The Campus and Business 

by Ted Warmbold 

9 Space-Earth Communications 
11 Computer Graphics 
18 A Cable for Growth 

28 Wasteland Revisited 

by Peter Benchley 

32 Bell Reports 

36 Organization Renewal 

44 Bell Forum 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

The United States is fast becoming a young country 
now that more than half of our population is under 
28 years of age. Because young people are important 
to us more than just as customers, the Bell System and 
several other organizations joined with the Gallup 
organization to survey the attitudes of over 1,100 
college students at 57 campuses across the country. 

Like several other studies, the Gallup results indi- 
cated that young people have mixed emotions about 
business and its role in society: 84 per cent commend 
business for what it has accomplished, but almost as 
many (76 per cent) offer criticism. Three out of four 
business administration and engineering students 
may lean towards a business career, but other students 
(which make up 80 per cent of the total) have much 
less preference and regard for business: two-thirds of 
them say they prefer education or government work. 

For an insight into the thinking of the college gen- 
eration, BELL TELEPHONE MAGAZINE asked a Uni- 
versity of Missouri graduate student to give us his 
thoughts on the attitudes of college students and 
explore some of the reasons behind them. A native of 
St. Louis, Ted Warmbold is currently finishing up his 
requirements for a master's degree from the School 
of Journalism. While an undergraduate, Ted was 
active in a wide range of student activities and is now 
looking forward to a career as a newspaper reporter. 
And to get the young businessman's reaction to this 
summary of college attitudes, we asked several recent 
college graduates now working for Bell System com- 
panies for their comments. 



The Campus View 

By Ted Warmbold 

Never has a generation been more analyzed and 
criticized, more praised and pampered, more cod- 
dled and condemned— and more misunderstood- 
then today's college generation. Especially disturb- 
ing is student apathy toward big business. 

Though industry still obtains substantial numbers 
of engineering and business administration students, 
it seems to be suffering a decline of interest among 
undergraduates as a whole. College graduates, in 
increasing numbers, are turning to public service and 
education for employment. 

Why? The answer lies in this younger generation: 
Never have so many had so little experience or con- 
tact with war, hunger, poverty and disease. We have 
hugged the headlines with our riots, rebellions, 
Beatlemania, Vietnam protests, LSD experiments, 
draft-dodging and our craze for James Bond and Bat- 
man. And with it all, we find the hope of the world 
in our laps and the threat of war on our shoulders. 

In dress, bizarre and shocking fashions, the mod 
look, are "in." Music — our songs are no longer ro- 
mantic. Today they are serious and startling social 
commentaries. We don't embrace while dancing but 
perform as individuals — the extreme is the disco- 
theque: the dancer go-goes it alone. 

Intellectually, we think we outshine our elders, 
many of whom never had comparable educational 
opportunities. Politically, we are far from apathetic 
and, in fact, are too often attracted by the extremes 
on both sides. The art we enjoy — both "pop" and 
"op" — makes even Picasso seem old-fashioned. 

Not everyone is like this, to be sure. But the leaders 
of this revolt affect our attitudes, if not our overt 
behavior. Emotionally, all of us support the revolt 
against the older generation, the "Establishment." 

But where does business fit into this picture? That's 
the point, it doesn't! 

Many responsible businessmen are perplexed and 
bewildered by the attitudes of the younger genera- 

The Business View 

Each of the nine recent college 
graduates now working for Bell Sys- 
tem companies agreed that business 
has a problem communicating with 
college students. They also agreed that 
most graduates want to become 
quickly acclimated to the business 
world by being given responsibility 
and the opportunity to express them- 
selves. Here are excerpts of what they 

Ed Paul, New Jersey Bell: The college 
student looking at business doesn't 
see anything that really takes his 
fancy, anything he can really get his 

teeth into, anywhere he can make his 
mark. We should send people back to 
job and career seminars and have 
former graduates representing various 
industries go back to discuss business 
with undergraduates. We should also 
publicize what we are doing in the 
field of education. 

Use Werzer, AT&T: People coming out 
of college are used to having an in- 
tense, pressure environment where 
they can produce and where they 
have immediate recognition for what 
they produce. They feel that in busi- 
ness this kind of feedback may take 
months. They are looking for an at- 
mosphere where there is more pres- 

sure, responsibility and human con- 
tact. We should give students summer 
jobs that are not just a training 

tion. But students themselves are quick to explain 
their attitudes. Criticism is often pointed, and highly 
personal: "Today's business world just doesn't turn 
me on," moans a graduate student. "After all, .there's 
more to life than making a buck." 

Some rebel against the unrelenting drive for profits. 
"A businessman has to think in dollar signs to sur- 
vive," exclaims a 22-year-old education senior from 
Kansas City. Others object to increasing competitive 
pressure. "All you get for a gold-plated salary is a 
gold-plated ulcer," says a math major from St. Louis. 
Still others view the modern corporation as a faceless 
tomb of conformity. "I'd rather polish shoes than 
work for a corporation where men aren't capable of 
having an original thought," says an 18-year-oid col- 
lege freshman. And some, like the coed who worked 
for two years as a secretary in New York City, just 
can't take the boredom. "The four executives in that 
office couldn't even keep one secretary busy, much 
less four of us." 

To some students, big business seems a jungle 
where acceptable standards of ethics are readily com- 
promised by corner-cutting in a drive to meet com- 
petitive pressure, to turn a fast buck. Ethics has always 
been a preoccupation of youth. But to this genera- 
tion, it is especially important. They cannot forget 
when John F. Kennedy issued his challenge: "Ask 
not what your country can do for you, ask what you 
can do for your country." 

In the opinion of many students, it seems that big 
business, instead of heeding )FK, has willfully turned 
his exhortation on its head, to read: "Ask not what 
you can do for your country, but ask what your coun- 
try can do for you." Most students are patriotic, many 
are prepared to risk their lives for their country in the 
jungles of Southeast Asia. And yet they think some 
big businessmen are embarked upon a course of 
acquisition and selfishness, often at the expense of 
the country for which the students are prepared to 
risk their own lives. 

John Conahan, Bell Telephone Labor- 
atories: The important word to college 
undergraduates is 'commitment.' It's 
hard for the student to apply this com- 
mitment to the business world. They 
have an impression that business is 
narrow: they can't see that there is a 
broad spectrum of opportunities in 
business. We should publicize the fact 
that background and accomplishment 
are recognized in business just as they 
are in education. 

Angelo Donofrio, Bell Laboratories: 

The problem is one of information. 
The fields of education and govern- 
ment have outlets of information on 

They see, for the sake of a few million dollars in 
extra equipment, thousands of industrial plants fill- 
ing rivers daily with tons of polluted waste. They see, 
for the sake of a small percentage increase in sales, 
an endless chain of billboards plastered along the 
nation's highways. They see industry executives being 
sent, like naughty schoolboys, to prison for price fix- 
ing. They see the pressures brought to bear to defeat 
the truth-in-lending and truth-in-packaging bills. 

And the younger generation could not help but 
witness the reluctance of top auto industry officials 
to introduce safety features. Though cancer remains 
a number one killer, youth sees business concerned 
with cigarette sales. 

These incidents, to be sure, are peripheral. The vast 
majority of big business is not guilty of such sins. But 
the good that 95 per cent do is oft-forgotten in the 
headlines about the other five per cent. Most stu- 
dents realize that only five per cent of business has 
been caught up in this ethical quagmire, but they 

resent the fact that the older generation expects 
them to believe these incidents never happened. 

Our impressions of big business are also contra- 
dictory: We know businessmen are diligent workers, 
well-trained in their fields, creative, dedicated and, 
at times, intellectual. But, we get the impression they 
are selfish, lacking in public spirit and insincere. 

Idealism is the key to understanding the younger 
generation and its attitude toward business. Its stand- 
ards are high — and they are severe. Not because 
youth hates big business, but because it has come 
to expect so much from it. The new breed does not 
challenge the right of big business to make a profit 
but it does ask how businessmen use this profit — 
whether it improves the quality of American society. 

If it does not, big business is blamed — but strangely 
enough, not usually the big businessman. Why? Be- 
cause big business is so impersonal. How many top 
business executives can the average student name? 
The few that come to mind are those who have left 

the campus, but business doesn't. 
There is a missing personal element. 
We should send a young alumnus 
back to school with the recruiter. 

Joe Turri, Long Lines: Money is no 
longer a major motivating factor. The 
student wants a constant feeling of 
responsibility, achievement and rec- 
ognition. Today, the professor will 
suggest something like graduate 
school because he feels it stresses in- 
dividual growth. We have to convince 
professors that we are bent on indi- 
vidual wants and needs, that we're 
not going to take the college graduate 
and sap him. We have to make them 
realize we want individuals to grow. 

John Kurtz, Western Electric: The stu- 
dent has a stereotype to combat. 
Whereas he views himself as an indi- 
vidual, industry may look upon him as 
becoming part of a stereotyped class. 
We must bridge this conflict, dissolve 
this barrier. We must get it across that 
we do not view him this way. He must 
feel that we will recognize his attri- 
butes, give him something challeng- 
ing to do. 

Joseph McCann, Western Electric: The 

time a student feels that it takes just 
to get oriented in a company simply 
doesn't fit into his structure. He is not 
used to the long term. He wants to 
have impact. We have to be commu- 

nity-oriented as a company and en- 
courage individuals to be that way. 
We must fulfill our expectations. 

Tom O'Brien, New York Telephone: 

We must create an image that appeals 


industry for public service— Robert McNamara of 
Ford, Charles Percy of Bell & Howell, Sol Linowitz of 
Xerox, George Romney of American Motors — men 
who were interested in more than industrial profits. 
Aside from the ethical picture, a major student 
beef is that business is just plain boring. "An unexcit- 
ing rut," says a business student who spent last sum- 

mer as an industrial! trainee and \ou's hell never 
return. "I spent the day trying to distribute one hour's 
work over eight." Or take the case of the Ph.D. who 
quit industry after a year and a half to teach market- 
ing at a midwestern university. "I turned out to be 
their 'consumer relations man,' " he reports. "I picked 
people up at the airport, took them on tours of the 
plant, slapped them on the back and gave them gifts. 
Some challenge!" Students view big business as a 
high pressure, conformist place where superficial 
values prevail — where men in gray flannel suits in- 
dulge in gray flannel thinking. 

And where do such notions come from? From the 
university professor who five years ago left a success- 
ful career in industry to teach economics — obviously 
he finds the classroom more stimulating than the 
executive suite, whether or not he ever mentions it to 
his class. It comes from the student's father, as he be- 
moans the office "rat race" or the dismal future of 
certain automation and possible unemployment. 

to the idealistic-minded college stu- 
dent. Let students and professors 
know that we are involved in civic 
affairs. Go out to the college campus 
and show a movie about how we are 
helping youths in Harlem. They know 

we can operate a telephone, but they 
should also see that our employees 
can be active in the community. 

Hans Russell, New Jersey Bell: The 

only representative of business that 

ever shows up on campus is the re- 
cruiter. When you see him, you are 
immediately on the defensive. We 
should get younger people that are 
not that far-removed from college to 
go back and talk to students. 

Today's student has no great urgency to get a job 
and make money. Unlike the Depression and World 
War II generations, today's student has money in his 
pocket and usually takes it for granted. He sees no 
reason to turn in his college sweatshirt for a white 
collar — and so, he frequently turns to graduate 
school or the Peace Corps. Security is dullness. 
Today's college generation wants action — plus 

Alumni tell us that many of those initially enthusi- 
astic about a business career are often quickly dis- 
illusioned by the training programs of large compa- 
nies. As one college administrator said in a national 
magazine: "A lot of companies take good men in 
and bore them something awful. Second-rate people 
run training programs and grind guys through all 
kinds of dull assignments. The trainee never sees 
really bright people." 

Big business of today must not only compete for 
the college senior, one industry with another, but it 
also must compete with rival vocations. To many 

fes] W^ 

idealistic seniors, law, medicine, teaching and jour- 
nalism hold an appeal unmatched by the prospect of 
sitting behind a walnut desk with a bevy of beautiful, 
efficient secretaries. In the past decade, the rise in 
prestige of these professions has been accompanied 
by a rise in salary. At the same time, these professions 
hold an appeal for the student aroused to the chal- 
lenge of the New Frontier. Less supervision, more 
responsibility and less pressure has forced the sit- 
uation where big business no longer can select the 
cream of the college crop, but must compete in a 
wide-open market with the professions, to say 
nothing of graduate schools. 

And unlike the youth of a previous generation, 
today's college student faces the ambiguity of the 
present-day selective service system; He is unsettled 
and this feeling permeates his attitude toward big 

What can be done to improve big business' image 
on campus? What can be done to change the image 
created by limited personal experience, the shape 
of the news and the student's important but indirect 
contact with the commuter mentality of the corpo- 
rate world: the fairytale fantasy of "The Man in the 
Gray Flannel Suit" and "Cash McCall" and the vapid, 
back-slapping of "Death of a Salesman"— to say noth- 
ing of the soapbox serials and the unflattering waste- 
land of so much of television drama? Frankly, I don't 
know how business can best tell its story on the 
campus, but 1 do think today's college generation 
will turn to big business if it sees a challenge there. 
Today's graduate demands the unusual business, with 
sophisticated research laboratories, freedom to think 
on his own, the latest management techniques and 
an opportunity to be treated like an educated man. 
Yes, youth is demanding — but demanding challenge. 
If business can offer this, business can win the confi- 
dence and respect of the younger generation. ■ 

To meet the long distance communications needs of America 
in the '70's/80's— "and beyond"— the Bell System has proposed a new plan for 

Space-Earth Communications 

Sometime in the seventies, your voice 
may travel the 2,800 miles from Los 
Angeles to New York via a 46,000- 
mile trip to outer space. This is one 
possibility that could result from the 
latest Bell System proposal on how to 
unclog the earthbound voice, data, 
and TV communications highways of 

Based on ten years of Bell Labora- 
tories research into satellite communi- 
cations, the proposed system utilizes 
the latest technology of space com- 
munications. Here's an outline of the 
proposal recently presented to the 
Federal Communications Commission: 

• Beginning in 1969, orbit two syn- 
chronous satellites similar to the kind 
currently being considered for domes- 
tic use by Comsat. Each of these sat- 
ellites would have a capacity for 9,600 

voice circuits or as many as 12 TV 
channels. This capacity would be inte- 
grated with the Bell System's nation- 
wide wire and microwave network 
and permit the telephone companies 
to select the most economical path- 
way to meet a given need. 

• The first two satellites would be 
"locked on" to large transmitting and 
receiving stations in the vicinity of 
Los Angeles and New York. In addi- 
tion, some 73 smaller TV "receiving- 
only" earth stations would be built 
in selected locations across the coun- 
try from which terrestrial microwave 
links would connect to TV broadcast- 
ing stations. Initially, the system 
would provide facilities for the equiv- 
alent of about 3,200 two-way voice 
circuits, 8 full-time TV channels, and 
12 TV channels for "occasional" use. 

This first phase would be completed 
about 1970 or 1971 with the construc- 
tion of another large transmitting and 
receiving station near Chicago, and 
the launching of a third satellite. 

• Initiation of the second phase of 
the plan would begin about 1972 with 
the introduction of an advanced- 
design satellite capable of providing 
12 TV channels and over 30,000 voice 
or data circuits. 

• Increased communications ca- 
pacity will be possible through use 
of previously unused higher frequen- 
cies, highly directional satellite an- 
tennas and new transmission tech- 
niques. Four of these advanced design 
satellites would be launched: two 
about 1972, one about 1975, and one 
about 1976. The last two would re- 
place the three satellites launched 

during the first phase. The 73 TV 
receiving stations would be supple- 
mented by 26 new transmitting and 
receiving stations. 

• On the question of ownership 
of the proposed system, AT&T's posi- 
tion remains consistent with the ap- 
proach it has taken on satellite serv- 
ice in the past: Comsat would own 
the satellites and the common carriers 
who use the ground facilities would 
own and operate them. 

The Bell System proposal offers 
important advantages over any other 
plan seen so far. 

Number one is cost. The new space- 
earth system would save money in at 
least two ways. It avoids the waste 
and duplication of facilities that 
would result if a number of privately 
owned systems were constructed. And 
the state of the art is advancing so 
rapidly that it probably will be 

cheaper to construct new bulk cir- 
cuit capacity via satellite than it would 
be to build new "overland" facilities 
— at least at distances over about 1,300 

Besides providing maximum service 
at minimum cost, "Phase 11" of the 
plan helps avoid crowding the sky 
with radio signals. By using the higher 
frequencies made possible by ad- 
vanced satellite and ground station 
design, the new system would not add 
to the clutter caused by the ever-in- 
creasing demand for lower-frequency 
microwave channels. 

Also among the main advantages 
cited for the new plan is its complete 
flexibility. This means that the system 
need not be pre-committed to any 
particular use. It would be capable 
of handling full-time program trans- 
mission services for the three major 
commercial TV networks, a fourth 

major commercial TV network, a 
nationwide educational television 
network, and anticipated communi- 
cations requirements of the public and 
the government — civil and military. 
Yet, for any given occasion, terrestrial 
facilities would be used if they were 
the most economical, considering the 
over-all nationwide demand for cir- 
cuits at that particular moment. 

In submitting the new plan, the Bell 
System stressed that its recommenda- 
tion was based on an objective study 
of future communications needs. 
These studies, said AT&T, "involved 
no commitment for or against the use 
of satellites. . . . Rather did they in- 
volve an objective addressed to the 
broader question: How can the 
growth requirements for United States 
common carrier services be met at 
lowest cost. The overriding criteria . . . 
were quality of service and cost." ■ 

Initial phase of AT&T's proposed Space/Earth System calls for two 
satellites intermixed with ground facilities. 

Combining terrestrial facilities with satellites provides reliable 
communications, even if one ground station is obstructed. 

/ \ 


^^ ' 



The development of new computer programs and display devices 

which can read and draw pictures helps designers and engineers 

make more efficient use of machine technology 

Computer Graphics 

Without knowing it, millions of Americans watching 
television recently saw in action one recent develop- 
ment in computer technology that is rapidly pushing 
outward the boundaries of the man-machine rela- 
tionship. Last November 8, election results on the 
CBS network were graphically illustrated in constantly 
changing pictorial representations on a device resem- 
bling the TV tube itself. Although computers have 
been used before — and were used that night — to 
compile and predict results of the nation's voting, 
it was the first time that the general public had seen 
output from a computer's computations shown 
directly in visible, pictorial form. 

It was just one manifestation of what has rapidly 
become one of the most dramatic and exciting ad- 
vances in computer technology: computer graphics. 

Computer technology itself has developed at a 
fantastic pace and is now facing new horizons in 
science and industry. Indeed, Dr. Kenneth G. McKay, 
engineering vice president of AT&T and former 
executive vice president of Bell Laboratories has said, 
"There is now virtually no segment of research or 
development that does not depend vitally on com- 
puters. Their use has not only accelerated the pace 

of discovery but it has enabled us to attack problems 
which previously were far beyond our reach." 

Bell Laboratories has for some years been depend- 
ing more and more on computers to aid in research, 
analysis and, more recently, in electronic design. 

The problems referred to include many containing 
such vast numbers of complex variables that their 
solution by ordinary means would be utterly imprac- 
tical, entailing thousands of man-years of tedious, 
repetitive human calculation. The electronic com- 
puter can perform such calculations in minutes and 
deliver a workable result. The machine, however, 
must be told by the man what to do before it can 
deliver anything. Televised projections of final elec- 
tion results were amiss probably because of inade- 
quate programming of the computer. The workable 
result traditionally — if so new an art can be said to 
have a tradition — has been in the form of "long dull 
lists of numbers" (in the words of one computer 
expert). Both the instructions to the machine— input 
— and its responses — output — must be translated 
from human language into machine language, and 
then back again. 

While tasks of incredible complexity have been. 





and are being, performed by computers, it has been 
evident for some time that a more tractable, more 
natural relationship between the computer and its 
operator was becoming not only desirable but also 
increasingly necessary. Dr. John R. Pierce of Bell Lab- 
oratories has pointed out, "Easy interaction between 
man and machine is an essential element in forward- 
looking uses of computers. . . . We are just at the 
beginning of new and profitable uses for computers. 
In the impressive advances we are making, the needs 
for adapting the computer to the man are becoming 
more acute." 

Men could draw pictures before they could write 
— and writing itself, of course, is merely a series of 
refined, drawn symbols. Today, most small children 

draw naturally some time before they can string 
stylized symbols together to make words. Today, 
also, trained engineers, designers, and scientists 
envision and solve many problems through the essen- 
tially natural medium of drawing — from rough 
sketches to finished technical designs. The new revo- 
lution in computer technology is a happy marriage 
of the machine's unique capabilities and the man's 
predilection for his most ancient means of communi- 
cation — the picture. 

Basically, computer graphics is made possible 
through special input devices which can read data 
from pictures and output devices which can draw 
pictures. The physical means of exchange between 
the machine and its operator is the face of a cathode 



,JBJ , 




ray tube (CRT), which can display drawings, diagrams, 
or symbols of anything which can be stored in the 
files of a central computer. The CRT at which the 
operator (engineer, designer, whomever) works is 
associated with a small, "satellite" computer and a 
few simple controls. In an ideal system, the local com- 
puter would have access to a larger, central computer 
on a "time-sharing" basis. The local computer is pro- 
grammed through a series of instructions, called sub- 
routines, oriented specifically toward the kind of 
problem being dealt with by the operator. 

In practice, the operator is seated at a console fac- 
ing the cathode ray tube. Within easy reach are a 
a typewriter-like keyboard and a device called a light 
pen. About the size of an ordinary pocket pen, it 

Frame enlargements from a motion picture produced at Bell 
Laboratories show some of the steps in designing an electronic 
circuit. Coniputer gives printed instructions at key points and 
shows performance curves for the finished product. 

operates through photoelectric cells to pick up light 
from displays on the cathode tube, and with it the 
engineer controls size, shape, and position of images 
on the tube. The designer can apparently draw on 
the face of the cathode tube, moving or changing 
symbols, lines or whole forms, and creating new 
ones on a blank screen. 

Suppose the operator is an electronics engineer 
who wants to design an amplifier to be built on a 
printed circuit board. He invokes one of several pro- 
grams stored in the computer which displays on the 
screen visible symbols of basic electronic compo- 


nents— building blocks— for amplifier circuits. He also 
is given an array of "light buttons," which take the 
form of command words, such as connect, comment, 
move, delete, cancel, etc. The engineer, by choosing 
conventional electronic symbols displayed on the 
tube and connecting them with lines with the light 
pen, gradually builds, piece by piece, a block diagram 
of his circuit. As he goes along, the computer can 
show him what kind of performance he will get from 
various combinations of components as he tries them. 
It also provides him a variety of choices: The circuit 
works, but does it work well enough? Can I remove 
this or that component, making a simpler, more reli- 
able job that will still deliver specified performance? 
Can I cut something here or there and save money in 
production? By using the light pen he can make 
changes and immediately see the results on the 
screen. He has at his command one form of simula- 
tion, which is one of the computer's most valuable 
contributions to engineering design. 

"On-Line" Interaction 

There are potential savings in design costs. 
Furthermore, a great deal of insight can be gained 
into the design process itself. The significance of the 
whole concept is that the man interacts with the 
machine "on-line," while computation actually oc- 
curs. He is intimately involved in the computer-aided 
design process, rather than being separated from it by 
a barrier of specialized machine languages. He may 
try many different designs; within minutes he can 
change component values in a circuit — or the pro- 
portions of a boat hull, the shape of an airfoil, the 
dimensions of a building — and see resulting changes 

Carl Chrislensen, one of the computer program designers at Bell 
Laboratories, draws with the light pen on the face of the cathode 
ray tube at the Graphic I console, demonstrating direct on-line 
interaction between man and computer. 


in performance or appearance. He has at his finger- 
tips immediate answers to that most perplexing of 
questions facing the engineer-designer: "If I do this, 
what will happen?" 

As a computer expert at Bell Laboratories remarked, 
"An engineer can design a circuit, select components, 
make changes, check results, arrange the physical 
parts for mounting on a circuit board, and know 
exactly how the finished product will work — without 
ever walking into the shop and picking up a soldering 
iron. And he can do this in minutes or hours rather 
than in the days or weeks it would have taken by the 
cut-and-try method over drawing board and bench." 

The advantages of such computer-aided design 
through graphics are even more obvious when the 
job at hand is a large project on which several engi- 
neers must work concurrently, each dealing with a 
discrete part. Such projects are infested with prob- 
lems that may develop when one engineer designs 
and positions a part that interferes with some other 
part when the two are put together. This can be an 
expensive and frustrating experience when it is dis- 
covered during actual construction. Such anomalies 
can be prevented, however, if the graphic output 
from a computer displays all design elements of a 
project and permits the engineer to make changes 
before any physical object is built. 

An important point in this whole process is the fact 
that the engineer — electrical, electronic, mechan- 
ical, civil, geological, aerodynamic, hydrodynamic, 
automotive — need not be, and usually is not, 
an expert in computer technology. He need know 
nothing more about the machine languages, program- 
ming or internal workings of the immense electronic 
machine he commands than the technique of operat- 
ing the relatively few controls at its graphic terminal. 
The design tasks have been divided between the man 
and the machine, each doing what it is best capable 

of doing. The computer performs hundreds of arith- 
metic calculations in milliseconds and yields a con- 
crete result. The man brings to bear his specialized 
human knowledge in giving instructions, defining 
parameters, imposing constraints, accepting, reject- 
ing. But, in using the raw materials stored in the com- 
puter's programs and files for his own creative pur- 
pose, the designer, working directly on the face of 
the cathode ray tube with the light pen, is interacting 
in a fundamentally natural way with the machine — 
by drawing and pointing. 

Learn to Walk Before You Run 

It goes without saying, however, that this relatively 
recent extension of the computer's usefulness to man 
did not come to pass overnight. Actually, the com- 
puter has been producing graphic output in one form 
or another for some time. A technique known as pas- 
sive computer graphics has been used extensively in 
industry and science. This is applied in various ways, 
but generally it is a non-real-time, off-line procedure 
— which means that there are usually long intervals 
between input and output, and the designer is remote 
from the calculation of his problem— remote, at least, 
in comparison with the immediacy of the light pen 
and the new real-time, on-line computer techniques 
and display devices. 

For some time, the computer has been able to ac- 
cept numeric or graphical information as input 
through such devices as image scanners and produce 
graphical output on recorders, cathode ray tubes and 
digital plotters. The latter devices translate numeric 
output from the computer to visible form by guiding 
a pen on paper. This provides "hard copy" which, 
depending on the application, may be finished engi- 
neering drawings or true perspective illustrations. The 
visible analog output may also appear on a cathode 
ray tube, which is photographed. The resulting 


images on film may then be converted to drawings. 
Varieties of this method have been used at Bell 
Laboratories, which has been producing over 5,000 
microfilm frames per month since about 1960. Vari- 
ations of this technique have been used, among 
others, by the Ford Motor Company in windshield 
wiper design; by the ITE Circuit Breaker Co. for trans- 
former design; by the Missile and Space Systems Divi- 
sion of Douglas Aircraft for wiring and cabling draw- 
ings; by the Boeing Company for studies of pilot visi- 
bility in a variety of aircraft; by North American 
Aviation for design documentation, and by the U.S. 
Navy, Bureau of Ships, for detailed ship design. 

which Bell Laboratories pioneered techniques for 
some years ago. 

An essential element in adapting the computer to 
the man has been the development of problem- 
oriented machine languages, which are structured 
for specific disciplines in engineering or science. This 
fundamental groundwork must be laid before easy 
communication between non-expert operator and 
computer can take place. At Bell Laboratories, these 
developments are under way or completed: 

• Programs to permit drawing and editing of sche- 
matics (circuit diagrams using conventional symbols) 
and to record these on microfilm. 

The Art Has Grown 

Industrial application of computer graphics began 
about a decade ago, when General Motors launched 
a study, the DAC-1 Project, to explore the potential 
role of computers in graphic design. It was aimed at a 
combination of hardware and software (programs) to 
permit flexible man-machine graphical communica- 
tion. Dr. Ivan Sutherland, when a student working at 
M. I. T.'s Lincoln Laboratory from 1960 to 1962, took 
a pioneering step in proving the feasibility of man- 
machine graphical communication with cathode ray 
tube and light pen. His SKETCHPAD programming 
system has become a classic in the field. Project MAC 
at M. I.T. has been a major national program of 
research on advanced computer systems and their 
exploitation. Researchers there have made original 
contributions to the use of computer graphics in 
education by creating artificial environments — as, 
for instance, a display in motion on the cathode tube 
which simulates a trip down a road at near the speed 
of light. The Lawrence Radiation Laboratory at Liver- 
more, California is also active in the development 
and application of sophisticated computer graphics, 
particularly in the field of computer-made movies 

Cathode ray tube displays at graphic console of General Motors 
DAC-1 system show flexibility of man-computer communication 
in automotive design. (Courtesy CM Research Laboratories) 


• A program to convert a circuit drawn on the cath- 
ode ray tube to a form from which the computer can 
calculate frequency response. 

• Programs to place components in a circuit within 
the constraints of a grid on the tube to reduce total 
wire length of all connections. 

• A graphic command language to set up command 
structures on the face of the tube so data can be trans- 
mitted to programs in a computer that previously 
accepted only numeric data from punched cards. 

• A graphic data processing facility to provide stor- 
age of many schematics which can be edited in vari- 
ety of ways. 

• Computer programs to direct a numeric-controlled 
machine tool to drill holes in circuit boards and/or to 
precisely position components on the board. 

Uses of Simulation 

Because of its primary mission in support of com- 
munications technology, Bell Laboratories has, since 
it was established in 1925, devoted continuing re- 
search to studying the fundamental processes of 
speech and hearing. Now, modern techniques of 
simulation using computers are helping to analyze 
human production and perception of speech. Says 
Peter B. Denes, of Bell Laboratories, "All of us pro- 
duce and perceive speech so effortlessly that we 
assume the process . . . must be unusually simple. 
On closer examination, however, we find that this 
'simple' process is enormously complicated. ... A 
better understanding of it would be extremely valu- 
able for many reasons. On a practical level, it would 
enable us to design more efficient speech transmis- 
sion systems, automatic speech recognizers and 
speaking machines. On a fundamental level, it would 
tell us more about the way information is processed 
by that remarkable computer, the human central 
nervous system. . . ." 

In pursuing this research. Bell Laboratories has 
developed a computer-generated model of the 
human vocal tract, which enlists the aid of graphic 
display devices. The researcher, synthesizing speech, 
can see an outline of the vocal tract displayed on a 
cathode ray tube and at the same time hear the sound 
produced by that shape. With controls at the graphic 
console, he can change both shape and sound. 

Research into visual processes has also had a long 
tradition at Bell Laboratories. The Bell System is 
making increasing use of its transmission facilities 
for television and, more recently, for development 
of Picturephone^ see-while-you-talk service. Conse- 
quently, Bell Laboratories has been studying the com- 
plex nature of visual perception — how we receive 
impressions and interpret the world around us. One 
aspect of this research is seeking to explain how we 
perceive and locate objects in three-dimensional 
space. Experiments at Bell Laboratories include gen- 
eration of both two- and three-dimensional pictures 
in the form of both stills and movies. The three- 
dimensional effect is seen by viewing two slightly off- 
set images through polarized glasses. The forms or 
figures generated by the computer can be moved, 
rotated, expanded, reduced and the apparent viewing 
angle changed so that the forms on the screen can 
be seen from any position. Visual research using com- 
puters and display devices has demonstrated that 
stereoscopic depth perception is a simpler process 
than was formerly supposed. This finding may hasten 
the day when stereoscopic visual information can be 
processed automatically. 

A sizable group of experts at Bell Laboratories is 
working full time on such problems to produce 
sophisticated software which can further realize the 
immense potential of the computer. As Dr. John R. 
Pierce has said, "We are at the beginning. We cannot 
hope to see the end." ■ 

'Service mark of the Bell System 




A $180 million cable project from Boston to Miami is helping 
communications keep pace with the eastern seaboard's economic growth 

A Cable for Growth 

Although it represents a mere sliver of the geographic 
area of the nation, about one out of every three per- 
sons in the United States lives there. Though it's rich 
in historical culture and charm, it demonstrates a dra- 
matic re-birth ... a dynamic economy that's bursting 
at the seams. 

The area, of course, is the eastern seaboard, stretch- 

ing from New England to the tip of Florida. Within 
this complex of states, urban areas are re-building, 
new and old industries alike are creating more jobs, 
and fertile farm land is giving way to new homes, 
offices, factories and stores. 

While all the eastern seaboard states have shared 
in the two decades of prosperity since the end of 


resulted in 

growth and the increased mobility of people have 
a spiraling demand lor communications services. 

World War II, the most dramatic growth is centered 
in the southeastern quadrant where the commerce 
and industry boom is outstripping the nation as a 
whole in virtually every growth barometer. 

The four states of Florida, Georgia, North and 
South Carolina form the heart of the area's "boom 
belt." In the last 10 years these states have registered 
a population increase of almost four million — a 27 
per cent increase — compared to the national rate of 
17 per cent. Income in the area has almost doubled, 
climbing some 30 per cent faster than the rest of the 
country. Factory and non-farm payrolls are increas- 
ing at twice the country's rate. As one southerner 
puts it: "We've had a taste of prosperity and we 
like it." 

Such a skyrocketing economy, of course, creates 
demands for many goods and services, including ex- 
panded and more sophisticated communication fa- 

"Not too many years ago, I can vividly remember 
canvassing a town in the south to determine future 
telephone needs," recalls one Southern Bell tele- 
phone man, "No one wanted a telephone and didn't 
even know who he'd call if he had one. Now we're 
having trouble meeting all the requests we get. In the 
last 10 years, the number of telephones in our four 
seacoast states has more than doubled, and our in- 
vestment in facilities and equipment and long dis- 
tance calling has almost tripled." 

The tremendous increase in long distance calling 
is responsible for one of the largest cable projects 
the Bell System has ever undertaken, a $180 million 
underground cable that will be capable of carrying 
32,400 simultaneous telephone conversations. The 
cable, running from Miami up through the seacoast 
states to Boston, will relieve the over taxed commu- 
nications facilities that now tie together the east and 
the rest of the nation. 


Economic growth makes new 
cable system necessary, but 
planning makes it ready 
when and where needed 

Although it's only about the thickness of a man's 
arm, the Boston-to-Miami cable will be able to carry 
more simultaneous conversations than any other long 
distance transmission system now in existence. And 
like all other parts of the Bell System network, the 
new cable will carry all forms of communications — 
voice, data, teletypewriter, telemetry and television 
signals — without distinguishing between them. 

The spotlight is currently on the southern part of the 
cable route since the section from Miami to Washing- 
ton, D. C. is scheduled to go into service late this year. 
Most of the northern end will be completed next year 
when the entire route will be interconnected with 
other coaxial and microwave systems that crisscross 
the United States. 

Field work on the project began more than two 
years ago when thousands of aerial photographs were 
taken to determine where the 20-foot right of way 
would slice through the 12 states along the eastern 
seaboard. Permission to bury the cable had to be 
obtained from more than 10,000 property owners, a 
figure that undoubtedly would be higher without a 
unique arrangement with the Sunshine State Parkway 

Cross section of the 20-tube coaxial cable demonstrates the intri- 
cate nature ol the biggest cable ever manufactured by the Bell 
System. New Bell Laboratories-designed amplifying equipment 
is being used to increase the cable's capacity. 


in Florida. There 260 miles of cable was placed in the 
median strip, the first time a major cable route has 
been placed in the middle of a state turnpike. 

Actual laying of the cable began last March when 
a specially developed trenching machine began 
chopping a trench four feet wide and four feet deep 
near Elberton, Ga. Following closely behind the 
trencher, a cable-laying tractor lays out the cable 
from reels weighing up to nine tons and carrying 
about 1,750 feet of cable. After inspection, the trench 
is quickly refilled and the grass re-seeded. Only visi- 
ble signs of the cable are markers spaced along the 
cable route to urge contractors to call the telephone 

company before digging in the area. 

A wide variety of problems can arise as workmen 
weave cable through all types of terrain — from 
swamps to mountainous areas. In Florida, for ex- 
ample, snakes — "some six feet long and thicker than 
the cable," as one AT&T engineer says — plagued 
workmen. Underground springs in other areas con- 
verted the cable trench into a river bed and required 
the construction of small temporary dams. And at 
some points, rock formations required blasting be- 
fore they would give way to the giant teeth of trench- 
ing equipment. On most small streams the cable can 
be placed directly in the water, but larger rivers like 
the Savannah and the Hudson require piping and 
special submarine cable. 

Each step is carefully inspected before the next 
phase is started. One Long Lines inspector estimates 
that he will walk through four pairs of shoes and 
cover more than 1,000 miles on foot before his sec- 
tion of the project is completed. 

Thirteen units of the Bell System, coordinated by the Long Lines 
department of AT&T, have joined forces in the cable project. The 
cable was manufactured at Western Electric's Baltimore Works 
where, at left, it is being tested to insure dependability. 


Cable laying techniques vary from the relatively easy going along Florida's Sunshine State Parkway and rich farm land to the rocky 
terrain of the northeast. Work crews can normally lay two to three miles of cable per day when not faced with unusual soil conditions. 


Two-man splicing teams join together the 104 wires and 20 copper tubes of the cable. An average of four splices per mile are needed 
and are then covered over with a 44-inch lead sheath. Splicing is done in open pits or precast manholes that also hold repeaters. 


Gigantic air intake duct will be used in conjunction with the cen- 
ter's live air conditioning units that could cool 163 homes. 

All communications and ventilating equipment is protected from 
damage by mounting it on coil springs and rubber cushions. 

Only portion of the building above ground is garage-like struc- 
ture through which people enter and leave building. 

New communications centers 
could serve city of 100^000 people 

A string of 15 underground communications cen- 
ters and some 900 unmanned auxiliary stations dot 
the route of the 1,800 mile cable system. The pur- 
pose of placing the switching centers underground 
is to protect the system from all natural — and most 
man-made — disasters, practically anything short of 
a direct nuclear hit. 

For virtually all communications and building 
equipment in the centers, back-up facilities are in- 
stalled and linked by fail-safe devices. In the event 
of a nuclear attack, sensors — poling up through the 
ground — slam spring-loaded blast valves shut to seal 
the building. During the emergency, auxiliary facili- 
ties provide v^/ater, power and ventilation. Beds, food, 
toilet articles, cooking facilities, refrigeration and 
everything necessary to carry on for three weeks is 
stored in the center. 

But day in and day out, working in the gigantic 
underground building will be no different than the 
thousands of other telephone switching centers 
across the country. The building contains stand-by 
emergency power control units, battery equipment, 
telephone transmission units, administrative offices, 
ventilating and air conditioning facilities, mainte- 
nance and storage areas, and training rooms. 

An average size junction center like Monticello 
will have about as much central office equipment as 
that which is required to serve a community of about 
100,000 people. Although the buildings will not 
initially be filled to capacity, ultimately about 2,000 
tons of equipment will be installed by the Western 
Electric Company. ■ 

Nearly completed communications center at Monticello, Ca. will be covered with four feet of earth, a grass-sodded roof and a black- 
topped parking area. Measuring roughly 150 by 200 feet, the structure is equivalent in height to a two and one-half story building. 


Though some are being attempted, most cultural programs on commercial TV are n<t 

Wasteland Re-visited 

By Peter Benchley 

TV Editor, Newsweek Magazine 

Editor's Note: The current television season arrived amidst much 
ta/k about cultural programming. New shows were developed 
and some old ones changed, among them "The Bell Telephone 
Hour." To get a critic's appraisal ol the season thus far, we turned 
to Peter Benchley, TV editor of Newsweek. Mr. Benchley, a 7961 
graduate of Harvard University, is the author of two books and has 
contributed articles to such magazines as Holiday, the New 
Yorker, Vogue, Diplomat and TV Guide. 

Before it actually came into being, the 1966-67 televi- 
sion season was a press agent's dream. For the first 
time in recent memory, the network publicists had 
subjects they could tout without resorting to the 
burbling inanities that usually camouflage prime-time 
pap. Television was attempting to return to quality. 
ABC announced its ambitious "Stage 67" series of 

weekly specials. CBS, whose situation comedies have 
long held a lock on the Nielsen top ten, loudly broad- 
cast the advent of "CBS Playhouse," and set aside 
$500,000 for the purchase of scripts. NBC began to 
assemble a Sunday series of experimental dramas, 
and announced that "The Bell Telephone Hour" 
would abandon its concert format and essay a series 
of 15 cinema verite musicals. A new Golden Age was 

The season is now half over, and in retrospect it 
seems that the proclamation was somewhat prema- 
ture. The 1966-67 season has so far merited accolades 
sufficient for, say, a Bronze Age, and even those 
deserts should be based more on lofty ambition than 
tangible results. The intent, the ambition, the deter- 


ing up to expectations. A TV critic describes what is needed to improve the picture. 

mination were all present, but the press agents may 
have out-flacked themselves. Despite certain notable 
achievements, a Golden Age is still far off. 

At best, the TV year has been a mixed bag. There 
were one or two good commercial drama series, such 
as ABC's short-lived "Hawk," but they responded to 
the immutable Nielsen ratio: ratings are in inverse 
proportion to quality. ("CBS Reports," for instance, 
perennially grabs a Nielsen slot somewhere near 
95th.) NBC'-s "Chrysler Theater" and "Hallmark Hall 
of Fame" as usual came up with some worthwhile 
productions. But they have been on the air for so 
many years that they generate little excitement. They 
are too often taken for granted. 

"ABC Stage 67" has been an exemplary case of 
valiant purpose and dubious execution. The first 
show, "The Love Song of Barney Kempinski," was a 
wild attempt to exploit the bizarre humor of play- 
wright Murray Schisgal and the dead-pan, other- 
worldly, hilarious capering of Alan Arkin. It missed 
its mark, but it was, at the very least, an honest 
attempt to do something different. On the other 

hand, "Olympus 7-0000," the Richard Adier musical, 
was a meretricious cop-out — as if the producers had 
thought to themselves, "Maybe if we put this mess 
into an arty series we can salvage some good 
reviews." And so it has gone with "Stage 67," from 
the respectably earnest to the sleazily slick, from 
(almost) are gratia artis to (occasionally) epater la 

One of the few consistently rewarding endeavors 
has been the new "Bell Telephone Hour." The show 
itself is hardly new, having yodeled its way through 7 
seasons on TV, and 19 more on radio before that. But 
the approach to the "Telephone Hour" is, indeed, 
innovative. Until this year, the show had geared itself 
to an exclusively aural format. Somewhere there 
seems to have been a rigid doctrine: music is to be 
heard, and visual extras are superfluous if not abra- 
sive to the audience. There was little use — creative 
or even practical — of television as a medium. An 
orchestra would play, a singer would sing. Camera 
work was prosaic: head shots, full-body shots, long 
shots. The audience was assumed to be doing its knit- 

ting, reading a book, or having dinner. "The Bell 
Telephone Hour" was, in effect, simply the most ex- 
pensive long-playing record ever produced. Then this 
year Bell decided to change its tune. 

"Corporately, we had become restless about our 
show," said AT&T TV advertising manager John A. 

Howland. "It had become static. And being live 
locked us into a format. So we had to make a decision 
about a new direction. We wanted to do more, really, 
than just a fine musical variety show. On the other 
hand, you can't be all classical." Basically, Bell wanted 
to humanize the show, to release it from the stiff 
proscenium format and make the viewers want to 
watch it as well as listen to it. The per show budget 
was jumped about twenty per cent for 15 shows. 
Some of the country's best documentary news pro- 
ducers were engaged by producer Henry jaffe to 
assemble individual shows. 

The intention was to try to combine the appeals of 
both music and film, to create a new television form, 
the musical documentary. About half of a given show 
would present performers in concert. The rest would 
be a personal closeup of the performers: how they 
prepare for a concert, how they react to other musi- 
cians, how their temperaments blend and conflict. 

And in certain cases, like the first show, "A Man's 
Dream: Festival of Two Worlds," the documentary 
would try to show how a whole musical festival is 
put together. 

For many of the shows, the film technique was 
to be cinema verite, an inaccurate, overused and 
overabused term, but the only current description of 
the technique that even approached its meaning. In 
news documentaries, cinema verite means that the 
cameraman uses a hand-held or shoulder camera. 
Thus unencumbered by heavy equipment, he can 
wander around unobtrusively and capture his subject 
as (supposedly) he really is. The film is often jerky, 
and quality changes radically as available light 
changes. But all this is (again, supposedly) compen- 
sated for by the verite — the truth — which is com- 
mitted to film. (In movies, the technique is vastly 
more complex and has no real bearing on television.) 

The technique is radical for a musical show, partly 
because, as Henry Jaffe has said, "the creative process 
begins in the cutting room." For some of the 60- 
minute shows, 70,000 feet of film were shot, and they 
later had to be reduced to 2,000. Ponder, if you will, 
the problem of synchronizing sound — which was 
recorded at the same time as the film — with little 
snippits of celluloid. Or of avoiding cutting a subject 
off in mid sentence, even though the film for the 
incident is lousy. 

Critical reaction so far to the Bell shows has been 
generally favorable — and with reason. Drew Associ- 
ates' production of "Festival" was a splendid opening 
hour, with a smooth intertwining of music and film. 
Leacock-Pennebaker's portrait of Van Cliburn was 
knocked for being desultory. Still, it was a fascinating 
— if not particularly incisive — look at the slender 
Texan. Throughout the first 7 shows, the blend has 
been excellent, and many of the portraits have been 
revealing — from the supreme self-confidence of Jane 


Marsh to the classical composure of Thomas Schip- 
pers and fiery conducting of Zubin Mehta. 

One ancillary element of the Bell Shows over- 
whelmed the justifiably jaded critics: the commer- 
cials. The programs are entirely uninterrupted. At the 
beginning of each hour, Bell announces that there 
will be a message after the show, and expresses a fond 
wish that the viewers will stay tuned. The two or three 
soft-sell commercials at the end of the shows are 
tasteful and quiet, and the phone company, which 
has permitted its shows to have continuity and musi- 
cal flow, thus enhances its image by restraint. 

Otherwise, the 1966-67 season has evolved very 
little from what it was in September — a series of 
ambitious promises. ABC's "Sunday Night at the 
Theater" has mysteriously ceased to exist as a topic 
for press releases but may be ready later this year. 
NBC's experimental dramas have not begun. And 
"CBS Playhouse," which may prove to be the most 
exciting dramatic enterprise, begins next month. 

In many ways, it's just as well that the networks 
didn't throw all their big guns at the public at once. 

Because of the miasma of flackery that inundated the 
press in September, critics were led to expect too 
much. Now that the balleyhooing has calmed down, 
they are likely to be more forgiving. And if the ambi- 
tious shows don't get murdered, the networks are 
more apt to keep programming them. For, after all, 
the networks did not begin to program quality out 
of sheer altruism. They were, as David Susskind said, 
"anxious to cultivate a public image." By going on a 
cultural binge, they could get their critics in the press 
and on the Federal Communications Commission off 
their corporate backs. But if the critics lambasted 
them unrelentingly, the networks could simply have 
adopted the pose of martyrs and returned to their 
normal schedules of unrelieved wretchedness. 

Before this season began, the New York Times' TV 
critic, jack Gould, wrote a piece entitled "Grounds for 
Cautious Cheer," urging the public not to expect too 
much, to take the so-called quality shows at face 
value, with a reservoir of admiration for a gallant try. 
Despite whatever failures have been broadcast so far, 
there are still grounds for, if not cheer, at least hope. 
Current and upcoming proposals such as those of 
the Ford Foundation, the Carnegie Foundation, Com- 
sat, the Bell System and others may, if ever acted 
upon, establish a truly viable educational-cum- 
cultural network. And the Overmyer Network, which 
is offering nothing but news and Las Vegas shows, 
may take a cultural plunge. 

But it is still up to the three networks and the spon- 
sors to set the pace for quality television. By the 
middle of this year it will be clear whether or not 
such worthy work can survive. If the shows are good, 
if the critics respond responsibly, if the public en- 
courages them by watching, and, most important, if 
more sponsors like Bell, Xerox and Hallmark will ven- 
ture out on a cultural limb, then someday the waste- 
land may not be so vast. ■ 




H. I. Komnes 

Romnes succeeds Kappel 
as AT&T chief executive 

H. I. Romnes becomes chairman of 
the board and chief executive officer 
of the American Telephone and Tele- 
graph Company on February 1. Mr. 
Romnes, AT&T's president for the past 
two years, will succeed Frederick R. 
Kappel, the Bell System's chief execu- 
tive since 1956, who is retiring. 

At the same time, Ben S. Gilmer 
becomes president of AT&T, succeed- 
ing Mr. Romnes, and John D. deButts 

assumes the post of vice chairman of 
the board. Both were also elected di- 
rectors of the company last month. 
Mr. Gilmer and Mr. deButts are cur- 
rently executive vice presidents. 

Effective on the same date, Angus 
S. Alston will become executive vice 
president, succeeding Mr. Gilmer. He 
in turn will be succeeded as vice 
president-personnel relations by 
William C. Mercer, who is now vice 
president-marketing. William M. 
Ellinghaus, assistant vice president- 
marketing and rate plans, was elected 
vice president and will succeed Mr. 

Mercer in the marketing post. 

Mr. Romnes brings to his new posi- 
tion more than 38 years of extensive 
experience in communications tech- 
nology and operations. His first Bell 
System employment was as a member 
of a Wisconsin Telephone Company 
line crew during his 1927 summer 
vacation from the University of Wis- 
consin, from which he graduated with 
an engineering degree the following 
year. After graduation he joined Bell 
Telephone Laboratories as a member 
of its technical staff engaged in cir- 
cuit design work. In 1935, he trans- 


ferred to AT&T and in the succeeding 
years rose through a variety of engi- 
neering management assignments 
there and in the Illinois Bell Tele- 
phone Company. In 1950 he became 
director of operations of AT&T's Long 
Lines Department, and two years later 
was named chief engineer of AT&T. 
After serving four years as AT&T's vice 
president-operations, he was elected 
president of the Western Electric 
Company in 1959. Mr. Romnes re- 
turned to AT&T as vice chairman of 
the board in 1964 and a year later was 
elected president. 

lohn D. deButts 

Mr. Romnes is also a director of 
Pacific Telephone and Telegraph 
Company, Chemical Bank New York 
Trust Company, the Goodyear Tire and 
Rubber Company, United States Steel 
Corporation, National Safety Council, 
American Cancer Society, and the 
Downtown-Lower Manhattan Asso- 

Mr. Kappel's retirement from active 
participation in AT&T management 
comes after more than 42 years of Bell 
System service. He will continue as a 
director and will act as chairman of 
the executive committee. 

His ten years as chief executive offi- 
cer were years of vigorous growth for 
the Bell System. During that time the 
number of telephones the System 
serves has grown from 50 million to 
more than 80 million and, under his 
leadership, the range of the services it 
offers has been greatly diversified. 
The number of AT&T share owners 
has more than doubled and now ex- 
ceeds three million — several times 
more than any other private enter- 
prise in the world. 

Mr. Kappel started his career in 
1924 as a member of line crew for the 
Northwestern Bell Telephone Com- 
pany in Minnesota. In subsequent 
years he progressed through a wide 
range of assignments to become vice 
president-operations and engineering 
of AT&T in 1949. In 1954 he was 
elected president of the Western Elec- 
tric Company, and, in September of 
1956, he became president and chief 
executive officer of AT&T. In 1961 he 
was elected chairman of the board. 

Mr. Gilmer, a graduate of Auburn 
University, joined Southern Bell in 
1926 as a telephone installer and pro- 
gressed through a wide range of 
assignments in Southern Bell, North- 
western Bell and Pacific Telephone. 
He came to his present post after 
eight years as president of Southern 

Mr. deButts, who joined the Bell 
System with the Chesapeake and 
Potomac Telephone Company of Vir- 
ginia after graduating from Virginia 
Military Institute, has served in C&P, 
AT&T and New York Telephone. He 
became vice president-operations and 
engineering of C&P in 1959, elected 
president of Illinois Bell in 1962, and 
came to AT&T in March, 1966. 


Equal Opportunity Award 

Unremitting effort to fulfill the prom- 
ise of equal opportunity is a necessity 
for both business and the nation, 
Frederick R. Kappel, AT&T board 
chairman, said in accepting the 1966 
Equal Opportunity Award from the 
National Urban League. The award is 
given annually to an outstanding in- 
dustrialist and a union leader for pro- 
moting fair employment practices. 
Also receiving an award was Joseph 
A. Beirne, president of the Communi- 
cations Workers of America. 

in accepting the award on behalf of 
Bell System companies, Mr. Kappel 
said equal opportunity "is a critical 
national problem and it must be 
solved. . . . We must search out the 
people who can learn the work we 
have to do. We must locate them — 
open doors to them — help to teach 
and motivate them — stay with them 
to see that they really get the full op- 
portunity they are entitled to." The 
Bell System is trying to do this in 
numerous ways, he said, including 
active cooperation with the schools in 
developing work-study programs that 
lead to jobs for people who can learn 
the necessary skills. "We think the 
motivating influence of these plans is 
very strong." 

He added that he was pleased that 
the Bell System companies and the 
CWA "have been able to work to- 
gether so cooperatively in this whole 

He also stated, "any company policy 
or program is only as good as the peo- 
ple in the business make it by reason 
of their personal understanding, inter- 
est, and initiative. . . . The growth of 
volunteer activities in counseling stu- 
dents, tutoring dropouts, and the like" 

are significant and should not be un- 
derestimated. "These activities," he 
concluded, ". . . do not relieve the 
company of responsibility," but "they 
surely signify a maturing understand- 
ing of what needs to be done, and they 
strengthen my confidence that when 
we point our policies in the right di- 
rection, the goodwill and energies of 
our people will take us where we 
ought to go." 

Aluminum Wire for Cable 

Fifteen miles of telephone cable con- 
taining aluminum wire — instead of 
the traditional copper wire — have 
been buried four feet below the farm- 
lands of Iowa so Bell System engineers 
can determine how well it performs. 
A new emphasis on aluminum wire 
has developed for two reasons: (1) A 
new cable sheath design and new 
splicing techniques developed by Bell 
Laboratories and Western Electric 
show promise of overcoming the 
problems of corrosion and conductor 
joining that appeared ten years ago 
when some aluminum conductor 
cable was used, and (2) aluminum re- 
search has taken on new importance 
to the Bell System because of the con- 
tinuing uncertainty irt the price and 
supply of copper. 

New Vehicle Recommendations 

New passenger cars and light trucks 
purchased for the Bell System's motor 
vehicle fleet will include a variety of 
new safety features. 

As operator of the world's largest 
private fleet of vehicles — about 
100,000 vehicles which traveled nearly 
a billion miles last year with one of 

the finest safety records — the Bell Sys- 
tem has long been interested in new 
automotive safety equipment. Many of 
the optional safety devices being 
added to 1967 models as standard 
equipment have been required on Bell 
System vehicles for many years, in- 
cluding seat belts, back-up lights and 
emergency flashers. 

In addition to endorsing this new 
emphasis on vehicle safety, AT&T is 
recommending to the associated com- 
panies that all 1967 models purchased 
include air pollution control devices 
and other safety features planned for 
introduction on 1968 models. 

Molten Metal Model 

A technique that now makes it possi- 
ble to observe what happens inside 
molten metal as it solidifies has been 
devised at Bell Telephone Laborato- 
ries. The new technique is helping 
scientists gain a fundamental under- 
standing of how metal changes from 
liquid to solid as it cools. This under- 
standing should lead to improved 


metal properties and thus more effec- 
tive use of metals. 

Prior attempts to see what takes 
place during solidification have been 
hampered because of the opacity of 
metals. By freezing certain organic 
materials which were selected spe- 
cifically for their thermodynamic 
properties, Dr. Kenneth A. Jackson of 
Bell Labs found that it is possible to 
duplicate the internal growth of 
metals as they cool and crystallize. 
The model that is created can be ob- 
served in the same way one might 
watch water freeze and form ice crys- 
tals. The new technique is relevant to 
all metals and allows simulation of 
many of the phenomena associated 
with metal growth. 

Unigauge to Reduce Costs 

The first installation of Unigauge, a 
new single-gauge concept of cable de- 
sign, has recently been completed at 
Rockford, III. Under development 
since 1962, the use of the Unigauge 
concept in providing the connection 
between central office and customers' 
premises is expected to result in sub- 
stantial savings for the Bell System. 

At the present time, a variety of 
different sizes and gauges of cable is 
used. Unigauge will reduce the 
amount of copper needed for cable, 
cut manufacturing and inventory 
costs, and simplify outside plant engi- 
neering. Additional central office 
equipment is necessary to maintain 
transmission standards and provide 
adequate signaling, but the savings 
will more than offset the added costs. 

The Bell System's investment in out- 
side plant for customer loops is cur- 
rently about $6.25 billion with $475 
million being added each year. It is 

estimated that the annual investment 
can be reduced by about $44 million 
per year through the use of Unigauge. 

Bell System Financing 

The sale of New Jersey Bell's $55 
million debenture issue last month 
brought the 1966 Bell System capital 
financing through bond sales to a 
record $1,315,000,000. 

The New Jersey Bell debt issue was 
the 13th Bell System debenture sale 
last year. Although 14 bond issues 
were sold in 1957 and again in 1960, 
the amount of debt financing last year 
reached an all-time high. 

Interest cost to Bell System com- 
panies varied from a low of 4.85 per 
cent for a New York Telephone Com- 
pany offering in January to 6.03 per 
cent that Pacific Telephone is paying 
for a $130 million issue sold in No- 

Other Bell System companies which 
sold bonds last year include Ohio, 
Chesapeake and Potomac of Virginia, 
Mountain States, Southwestern, 
Chesapeake and Potomac of Wash- 
ington (D.C.), Northwestern, South- 
ern, and Southern New England. In 
addition, AT&T sold two $250 million 
issues in 1966. 

Cardboard Computer 

Bell Telephone Laboratories has de- 
veloped a novel computer to help 
stimulate high school students inter- 
est in physics. The CARDboard Illus- 
trative Aid to Computation — called 
CARDIAC, for short — is a cardboard 
model which has the basic working 
parts of an actual digital computer. 

It was designed by David W. Hagei- 
barger, a member of the Information 
Processing Research Departmentat 

Bell Laboratories, for use in "The Man- 
Made World," a new program de- 
signed to improve the teaching of high 
school science. 

With the aid of CARDIAC, students 
are becoming aware of the computer, 
not as a "thinking machine," but as a 
machine responsive to man's instruc- 
tions. By following a red line path on 
the plastic and cardboard model, stu- 
dents can follow steps taken by a com- 
puter in executing programs and can 
use CARDIAC to solve problems. They 
can perform logical operations and see 
how abstract concepts of logic can be 
made concrete in circuits similar to 
those used in computers. 

Thus, the cardboard computer gives 
the student a working illustration of 
principles discussed in "Logic and 
Computers," the first phase of the ex- 
perimental course which was prepared 
by contributors to the Engineering 
Concepts Curriculum Project. Five Bell 
Labs engineers and scientists, profes- 
sors from a number of universities, 
and several high school science teach- 
ers are among those contributing to 
the experiment, which is sponsored 
by the Commission on Engineering 
Education and funded by grants from 
the National Science Foundation. ■ 


Aiming broad-scale management development efforts at the total organization, 

rather than at individual managers, is having dramatic effects 

on employee performance and morale 

Organizational Renewal 

Up and down the marbled, paneled or plastered hail- 
ways of a thousand offices they reign over empires of 
men, machines and paper. 

They are the managers — the supervisors and ex- 
ecutives—of our great institutions of business, gov- 
ernment and education. Once they were engineers, 
accountants, teachers or students primarily con- 
cerned with their own functions; now they are con- 
cerned with overall management . . . with fulfilling 
the goals of their organizations. 

But what makes them tick? How do they become 
good managers? Are they merely well oiled machines, 
conditioned to the organizational life? Or are they 
highly individualistic — inspired from within? 

No one has yet answered these questions satisfac- 
torily: Managers, like all people, are probably a bit 
of both. But psychologists and sociologists debate 
these opposing views of the individual in the or- 
ganization. Usually sociologists hold that man's per- 
sonality is plastic— it yields and changes to match 
the roles he is expected to play in an organization. 
Others, often psychologists, believe an individual's 
role in an organization is determined by his own 
unconscious motivations and personality structure. 

What this implies is this; If any large organization 
wishes to improve and perfect itself, it must inevi- 
tably make the basic decision of whether to aim its 

improval efforts at the overall organization, or at the 
individuals that make up the organization. 

Many businesses, government organizations, and 
non-profit institutions have developed and used vari- 
ous types of "development" programs in the past, 
with varying degrees of success. These have almost 
invariably been aimed at the individual, at promoting 
his own growth and understanding. It is probably fair 
to say, however, that rarely, if ever, have these pro- 
grams made a significant overall impact on the organ- 
izations in which they have been used. In fact, they 
have sometimes met with cynicism and rejection. 

In the past few years however, a number of organi- 
zations, including the Bell System, Hotel Corporation 
of America, Humble Oil, Union Carbide and others, 
have pioneered a new type of renewal program 
which aims at the organization as a whole. And the 
preliminary evidence indicates that these efforts are 
having a dramatic effect on the performance, morale, 
and structure of the organizations employing them. 
These new programs are particularly important since 
they come at a time when leaders of business, gov- 
ernment and education are pointing out that organi- 
zations must undertake efforts of self-inspection and 
renewal if they are to meet the demands of the future. 

The most prominent of these experts is Dr. John 
W. Gardner, Secretary of Health, Education and Wel- 



fare and former president of the Carnegie Corpora- 
tion. In an article entitled "Renewal in Societies and 
Men" which was based on his book, Self-Renewal, 
Dr. Gardner paralleled the aging of individuals and 
their growing resistance to new ideas with the same 
phenomenon in organizations. Of this process, he 
said: "The young organization is willing to experi- 
ment with a variety of ways to solve its problems. It 
is not bowed by the weight of tradition. ... As it ma- 
tures, it develops settled policies and habitual modes 
of solving problems. In doing so it becomes more 
efficient, but also less flexible, less willing to look 
freshly at each day's experience. Its increasingly fixed 
routines and practices are concealed in an elaborate 
body of written rules." 

Dr. Gardner also pointed out other characteristics 
of the aging organization: low motivation, powerful 
vested interest, concern with how things are done 
rather than why they are done, and ultimately, if 
nothing is done to help, a deterioration that leads to 
the graveyard. Every organization however, says Dr. 
Gardner, has the potential to encourage and promote 
"continuous innovation, renewal, and rebirth," but 
it first needs to recognize that it has a problem. 

To Be Dynamic, Revitalize 

Academicians and business leaders agree that even 
companies that do not have recognizable problems 
should strive to review and revitalize themselves if 
they are to remain dynamic and virile in an era of 
rapid change. As AT&T Board Chairman Frederick R. 
Kappel noted in his book. Vitality in a Business Enter- 
prise, "... a business must generate vitality under all 
circumstances that confront it, not only in times of 
crisis, but just as much under conditions of success 
that may have persisted through many years." 

For some time the Bell System has recognized the 
responsibility to make its managers more aware of 

the need for organization renewal. This recognition, 
combined with the idea that efforts aimed at revital- 
ization must be directed at the entire organization's 
development— rather than only at the growth of in- 
dividuals—led to the Bell System's organization 
development program. 

An Ail-Out Effort 

OD, as the undertaking is frequently called, is not 
a mere training program administered by the person- 
nel department. Instead of working through one in- 
dividual, this effort is directed toward the entire 
organization and its work environment. It is an all-out 
effort by the total organization to improve its own 
effectiveness — a do-it-yourself project designed to 
improve payoff in terms of increased efficiencies for 
the business and improved job satisfaction for the 
employees. The program requires: 

— Recognition of the need for improved effective- 
ness, or a genuine desire to implement a self-renewal 
program by managers who may be unaware of a spe- 
cific need; 

— An educational effort to create a common aware- 
ness of problem areas, to improve communications, 
and to develop a desire to work together toward 
solving problems, and 

— An on-the-job continuing program to provide the 
organization a systematic method for working to 
improve their overall effectiveness. The program 
places the primary responsibility for development 
and change with the organization itself. 

The Bell System's organization development pro- 
gram was the culmination of a long series of efforts 
aimed at improving managerial skills. Most of these 
consisted of training courses, and despite a wide 
variety of courses, the training people felt none 
brought about lasting improvement in managerial 
effectiveness: Most managers quickly reverted to their 


former habits when they returned to the job. "It soon 
became evident," says John Cogswell, AT&T man- 
agement training administrator, "that the reason for 
this failure was that training was being conducted in 
a vacuum — the participant's boss and subordinates 
were not aware of what he had learned, and even 
resisted putting into practice any of his newly ac- 
quired knowledge." Many operating people also 
looked on training as the personnel department's 
"way-out" experiments, with little on-the-job value. 
One critic noted: "Unless this management devel- 
opment activity becomes a regular part of the job, 
the anticipated growth of the business over the next 
ten years will have the effect of seriously diluting the 
benefits gained so far." 

Changing the Target 

It soon became clear that the hypothesis that an 
entire organization could be renewed by improving 
the effectiveness of each manager in the organization 
was wrong; that in fact, the organization was much 
stronger than the sum total of the individuals in the 
organization; its norms were too firmly established 
to be influenced by the efforts of individual mana- 
gers. Thus, if any lasting change were to be made, the 
organization itself had to become the direct target of 
the renewal process. In addition, the process had to 
be made an integral part of the organization's job. 

As this change in basic hypotheses was develop- 
ing, a number of experts in the business, government, 
and academic communities were also stating that re- 
newal efforts must consist of more than mere train- 
ing courses. 

First of all. Dr. Gardner and Dr. Warren Bennis of 
the Massachusetts Institute of Technology's Sloan 
School of Management both pointed out that organ- 
ization "dry rot" can infect an organization, and even 
an entire society, as it ages. Bennis, in an especially 

pessimistic mood said, ". . . the methods and social 
processes employed by bureaucracy to cope with its 
internal and external environment are hopelessly out 
of joint with contemporary realities." 

Other researchers, such as Dr. Rensis Likert of the 
University of Michigan and Dr. Chris Argryis of Yale 
University, were interested in work groups and inter- 
personal relationships. Likert concentrated on the 
primary work group — the idea that organizational 
cooperation is maintained through key people and 
jobs. Argryis stressed that the relationship between 
individuals in an organization must be improved if 
the organization is to accept new values. 

Although these ideas were not necessarily new, the 
manner of their use was different. Instead of focusing 
on the individual's effectiveness and relationship 
with workers, attention was given to their effect on 
"payoff," the return the organization gets from the 
managerial action. 

Meanwhile, Dr. Robert Blake of Scientific Methods, 
Inc. and his associates developed the "Managerial 
Grid." This is a framework in which various manage- 
ment styles can be plotted and analyzed to determine 
an individual's concern for production versus his 
concern for people. Blake's solution is to maximize 
these two concerns in a state of "team action." 

Finally, Dr. Frederick Herzberg of Western Reserve 
University and his colleagues, in studies of work mo- 
tivation, spelled out the distinction between what he 
called "motivators" — work content, the job itself — 
on one hand, and "maintenance factors" — work en- 
vironment or context — on the other. People ap- 
peared to be motivated positively, Herzberg said, by 
what their jobs actually consisted of, but not by the 
surrounding factors, such as benefits, work location, 
and to some degree, salary. 

With these thoughts in mind, the management de- 
velopment section of the AT&T personnel depart- 


This Pacitic Northweit Bell group ol sales managers and com- 
munications consultants typifies the three stages of organization 
renewal: recognition of the need, an educational effort, and a 
continuing on-the-job program. 

ment began to formulate a training course that would 
eventually become the foundation of the organiza- 
tion development program. Into it, they incorporated 
two main ideas. 

In 1963, they began to experiment with "family 
training." Ed Sutton, AT&T management training su- 
pervisor, explains: "Instead of training strangers at 
one level of management, or even unrelated groups 
of different management levels, we decided to work 
with two or three levels of management people with 
direct reporting relationships — work teams — to- 
gether. Although we first feared that the presence of 
the boss would inhibit the freedom of his subordi- 

nates, this turned out to be wrong. This new approach 
permitted the work teams to identify some of the 
problems that existed on the job, problems that might 
be preventing team members from working at maxi- 
mum effectiveness." 

Secondly, the course itself was designed to pro- 
vide the teams with a set of common standards and 
a common language with which to discuss their prob- 
lems. It consisted of actual study of the ideas of Blake, 
Herzberg and others, as well as training exercises 
and demonstrations designed to illustrate various 
management styles and techniques. To relate the 
course as closely as possible to the organization's spe- 


cific goals and objectives, an actual analysis of the 
work team's performance was used. Class sessions 
were scheduled to be alternated with work days in 
order to infuse the job itself with the techniques 
learned in the course. 

Perhaps the most important step in development 
of the overall program grew out of the comments of 
researchers concerned with organization renewal. It 
became apparent, that although the family training 
approach had eliminated the "vacuum" effect of 
earlier efforts, the program would still fail unless 
every manager, right up to the president, took part 
in the overall effort. It was obvious that the entire 

plan would fail unless the entire management team 
was personally committed to and involved in organ- 
izational development. 

Thus, the main goals of ODP became (1) to place 
the responsibility for the organization's development 
on members of the work team themselves; (2) to pro- 
vide the organization with the framework and tools 
to analyze its performance and values; and (3) to set 
off a continuing program of self-examination within 
the organization ... to make this part of the job. Spe- 
cifically, it was hoped that an organization develop- 
ment effort would, if necessary, bring about changes 
in organization climate, human attitudes and values, 


management skills, managerial styles, and operating 
efficiency. How this has succeeded is best seen in 
view of one company's experience. 

One Company's Experience 

Pacific Northwest Bell shared a common experi- 
ence with other Bell System companies a few years 
ago: As a result of a desire to improve its operations, 
top management felt some type of management de- 
velopment effort was in order, particularly to im- 
prove communications between management and 
nonmanagement people. James Stubner, former per- 
sonnel vice president of PNB and now an assistant 
vice president at AT&T, says, "Once it became appar- 
ent what the whole program was, we saw that it had 
the advantage of live participation, and got at the 
climate of an organization. We felt it would be a 
communications aid that would achieve real levelling 
and understanding in our work teams. Most impor- 
tant too, our operating people, who understandably 
take a hard look at the payoff in management 
development, saw that organization renewal could 
effect the bottom line and agreed to gamble on it." 

Most, if not all, of the people in the first group to 
participate in the organization development effort 
were skeptical when they heard about the program; 
some had cynical comments about the fact that the 
boss would participate. But as the group saw the con- 
crete relation of the program to the job, and as the 
work exercises and lectures in the classroom began 
to have their effect, management in each team began 
to open up with each other. Over a three-week 
period the work team's ability to work together and 
other aspects of the job began to emerge. 

As one of the participants in the first group, Data 
Systems Supervisor Bob Norton, says: "After being 
together in the environment that the training people 
established, the work team really builds up the ability 

to level with the boss and with each other. There was 
a general feeling in the group, after the first couple of 
days, of being perfectly honest with each other." 

The program has had an impact on the data proc- 
essing people on the job. Bob Norton relates some 
of the changes sparked by ODP: "Before we under- 
took organization development, I had 15 first and 
second level people reporting directly to me. It's 
obvious that I couldn't give everyone all the time 
they needed, and we had some problems with com- 
munications. As a result of suggestions from the 
group, we've gone to a crew chief concept to give 
the second level people more responsibility a la Herz- 
berg. This also lets the first level people get the bene- 
fit of ideas from the second level people and has 
created more of a team approach. 

"ODP also helped us realize that our group — the 
staff computer people for the entire company — had 
a problem communicating with other departments. 
Organization development concepts contributed to 
the 'Comptroller's Operations Planning' — a manual 
of our EDP jobs sent out regularly to other depart- 
ments to give them new ideas on how they can use 
our computer systems and programming assistance." 

Not A Panacea 

Norton also points out, however, that organization 
development hasn't been a panacea: "We still have 
some problems that we haven't solved. And it's pos- 
sible that the problems we've solved could have 
been taken care of without ODP. But the program 
has made us aware of what needs to be done and has 
developed an environment that helps create and ac- 
cept change." 

The second group to go through consisted of four 
PNB vice presidents, their staffs, and the then presi- 
dent of PNB, Walter Straley. These sessions resulted 
not only in the complete commitment of PNB's top 


management to organization renewal, but also in 
some concrete changes within the organization. For 
example, real communications have been established 
in many groups. PNB people cite the influence of 
Herzberg's ideas on achievement as well as Blake's 
management views as the reason for many of these 
changes. The experience of ODP actually fostered 
the climate that made it possible for the subject to 
be discussed frankly. 

Framework and Motivation 

Organizational renewal has been underway at PNB 
for about a year now and has provided work teams 
the framework to begin self-analysis, and the moti- 
vation to see that they carry it out. 

Mr. Stubner points out what he thinks is the real 
value of organization development in a large organi- 
zation: "The saving grace of every large organization 
—the reason it can prevent people from becoming 
identical tiles in a symmetrical mosaic — is that every 
group is made up of intimate subgroups that are 
small organizations in themselves. ODP performs 
surgery on these subgroups and helps free the indi- 
vidual and make his job more meaningful. It sounds 
crazy to say this, but ODP is really the most exciting 
and exotic experience a boss could have." 

To be effective, the program must find application 
in a continuing manner. PNB is just beginning to 
move into this phase of the program, so it is too earlv 
to predict the final outcome. But now that they've 
seen a bit of it, everyone in the company wants to go 
through the basic program so they can get involved 
with its on-going, continuing phases. 

What the final effect of this self-renewal program 
will be on the Bell System may never be known. Com- 
plex sociological phenomena are not easily meas- 

ured. The ultimate effect, of course, will be reflected 
in the overall performance of the companies using 
the program. But even this will not be easily deter- 
mined. Pacific Northwest Bell, for example, was per- 
forming well before ODP. The question that should 
be asked, as Dr. Bennis and Secretary Gardner point 
out, is what would happen to the organization after 
a number of years without a program like ODP? 

Other Companies Participating 

Apparently, not too many Bell System companies 
are willing to take the risk of not embarking on such 
an organization renewal program. Six other organi- 
zations, including Michigan Bell, Northwestern Bell, 
Mountain States, Southwestern, Southern New Eng- 
land, and AT&T's Long Lines Department, are deeply 
involved in organization development efforts. In the 
southern area of Long Lines, for example, all manage- 
ment people from the general manager down to the 
first level have taken the basic course and are now 
participating in the continuing phases. 

Other Bell System companies, including Pacific 
Telephone, Cincinnati and Suburban, Wisconsin, 
Western Electric, and Bell of Canada are also trying 
organization renewal in varying degrees. 

There will undoubtedly be those critics who will 
view organization renewal programs as one more at- 
tempt by large organizations to manipulate their peo- 
ple into a mold of conformity. But if ODP does 
change people, it does it in the direction of giving 
them a bit more freedom in choosing the alternatives 
available to them, and thus helping them find more 
meaning in their work. By acquainting them with new 
management styles, and by creating an environment 
of trust and confidence, it gives them new insights 
into the significance of their work. ODP may not be a 
cure-all, but it may be the beginning of an answer. ■ 



of policy 
and opinion 

Editor's Note: Rebuttal testimony in phase one of the FCC's investigation of 
the Bell System's interstate earnings was filed in late November, included was 
testimony of John J. Scanlon, AT&T vice president and treasurer, and Robert 
A. Lovett, a partner in the New York investment banking firm of Brown Brothers 
Harriman & Co. and former secretary of defense. Summaries of their testimony 
dealing with the Bell System's rate of return follow. 

Rebuttal testimony 
John J. Scanlon 

Mr. Scanlon's testimony deals with 
three significant areas in which wit- 
nesses for the FCC staff have chal- 
lenged the Bell System position on 
rate of return: (1) The capital structure 
appropriate for the Bell System. (2) 
The relative risks of the Bell System. 
(3) The use of the comparable earn- 
ings standard to determine the equity 
rate of return required. 

Capital Structure 

All of the opposition witnesses urge, 
Mr. Scanlon notes, that the allowance 
for rate of return be premised on an 
assumed Bell System capital structure 
in which the proportion of debt is 
much greater than in the actual capi- 
tal structure. They assert that the Bell 
System would lower its overall earn- 
ings requirement through greater debt 
financing, because of the "superfi- 
cially lower cost of debt capital." 

Mr. Scanlon points out that they did 
not discuss, however, the problem of 
how the Bell System might have 
achieved the recommended capital 
structure, given the company's enor- 
mous capital needs over the last 20 
years and the response of investors to 
its security offerings in that period. 
And they did not attempt to compute 
in any realistic fashion what would be 
the current costs of debt and equity 
capital to the Bell System under the 

postulated financing program. 

". . . it is my judgment that had we 
attempted to follow such a course of 
financing the resulting increase in 
both debt and equity costs would 
have produced a present overall earn- 
ings requirement equal to or greater 
than that shown by the company to 
be its requirement with its objective 
capital structure." 

Mr. Scanlon submits that there is no 
valid basis for criticism of the Bell Sys- 
tem's past financing policies, which 
have enabled the company to meei 
the enormous demands of the post- 
war years with the attraction of capi- 
tal at reasonable costs. These policies 
have won the approval of the financial 
community, he points out, and have 
put the System in strong position to 
meet the demands of the future. 

"Therefore, there is most emphati- 
cally no basis for the Commission, in 
its determination of rate of return in 
these proceedings, to use a capital 
structure other than that employed by 
the Company in its showing of its 
overall return requirements." 

Mr. Scanlon comments on the argu- 
ment of Dr. M. j. Cordon, witness for 
the FCC staff, that with a seven per 
cent overall rate of return and an- 
nouncement of intention to finance 
in the proportions of two-third debt 
and one-third equity, AT&T would see 
the price of its stock advance to $74 
per share. 


"This so flies in the face of our 
actual experience with investors as to 
strain credulity. It is axiomatic, and 
abundantly clear in this record from 
the testimony of witnesses from the 
financial field, that equity investors 
pay less— not more— for lowered earn- 
ings, and that equity investors demand 
higher— not lower— returns where the 
financial risk of higher debt is in- 

One need only look at the current 
market for debt capital, Mr. Scanion 
stresses, to realize that future debt 
financing by the Bell System in any- 
thing approaching the volume recom- 
mended by Dr. Gordon would be a 
difficult undertaking at best, accom- 
panied by a substantial increase in 
interest costs. Moreover, starting in 
1970, much of the System's $9 billion 
of debt will come up for refunding. 

In the recently emerging economic 
outlook, however, it may be that the 
risks of debt financing will be moder- 
ated in the future, Mr. Scanion said. 

"Accordingly, it is our intention, 
conditions permitting, to place heav- 
ier reliance on debt in our future fi- 
nancing with the objective of having 
our debt ratio move toward the top of 
the 30 percent to 40 percent range we 
have regarded as appropriate. This 
will require a number of years. We 
can then consider whether some 
higher range of debt ratio would be 
appropriate in the light of conditions 
existing at that time. 

"Meanwhile, there is no logical rea- 
son to assume that a prospective 
change in the objective level of debt 
in the Bell System capital structure, to 
be accomplished over some period in 
the future, would afford a valid basis 

for a downward revision in the Sys- 
tem's present earnings requirement." 

Relative Risks of the Bell System 

One of the principal determinants 
of a proper capital structure, Mr. 
Scanion notes, is the degree of risk to 
which an enterprise is exposed. "Thus, 
the Bell System, with a debt ratio of 
30 to 40 percent, falls between the 15 
to 20 percent typical in manufacturing 
industry, which is more risky than the 
Bell System's business, and the 
approximately 50 per cent debt ratio 
typical among electric utilities, which 
are less risky than the Bell System." 

Testimony contesting this view was 
largely aimed at minimizing differ- 
ences in risk between the Bell System 
and electric utilities. 

"Dr. Thatcher (FCC staff witness L. 
D. Thatcher) supported his view that 
the Bell System is no more risky than 
an electric utility with little more than 
his personal opinion. . . . When cross- 
examined, he admitted to consider- 
able unfamiliarity with the operating 
and market considerations that bear 
on risk." 

Dr. Gordon apparently based his 
conclusion that Bell System earnings 
are no more unstable than those of 
electric companies on a study of vari- 
ations in earnings for his sample of 
electric utilities since 1950, according 
to Mr. Scanion. 

He points out that an analysis cov- 
ering this period is of little value in 
determination of risk, considering it 
has been a period of almost continu- 
ous growth with only brief periods of 
minor economic adjustments. For the 
Bell System, results of catching up on 
the backlog of service demand smoth- 

ered the effects of any economic ad- 
justments that did occur. 

"It is of interest to note . . . that the 
U.S. Department of Commerce, in ad- 
dressing itself to the question of vola- 
tility of demand, has specifically cau- 
tioned against reliance on the post- 
war period alone as a basis for any 
such determination. Studies over a 
longer period show Bell System rev- 
enues and earnings to be materially 
more sensitive to changes in business 
conditions than those of electrics." 

Mr. Scanion adds that under cross- 
examination Dr. Gordon also con- 
ceded a lack of familiarity with the 
basic factors affecting business risk. 

"The fragmentary support adduced 
by the opposition witnesses clearly 
cannot be said to refute the extensive 
analysis of both past and prospective 
differences in revenue and operating 
characteristics, operating ratios, wage 
and expense rigidity, and pricing 
economics discussed in my testimony. 
It does not refute the study by Mr. 
Bergfeld or the opinions from the in- 
vestor's viewpoint presented by the 
only representatives of the financial 
community who testified." 

No claim of "absolute precision" in 
appraisal of investment risk to the 
equity holder has been made, Mr. 
Scanion notes. Downward adjust- 
ments were made in earlier testimony 
in determining the Bell System's 
equity return requirement, "to allow 
for any possible differences in in- 
vestors' evaluation of the relative risk 
of an equity investment in AT&T 

Comparable Earnings Approach 

Mr. Scanion emphasizes that the com- 


pany presented evidence on its equity 
return requirement utilizing both 
comparable earnings and cost of capi- 
tal studies, and that, realistically ap- 
plied, the two approaches produce 
the same requirement. 

He then deals, in turn, with four 
arguments advanced by critics of the 
comparable earnings standard: (a) It 
does not recognize the importance of 
market prices, (b) It presents an im- 
possible problem of measurement, (c) 
There is no individual company com- 
parable to AT&T, (d) Comparison of 
AT&T with an average of all industrials 
or all utilities is improper. 

As to the first argument, Mr. Scan- 
Ion points out that the comparable 
earnings standard, both in theory and 
as presented in this case, does recog- 
nize the importance of market prices. 

"A company is able to obtain the 
investor interest necessary to enable 
it to attract equity capital on sound 
terms only if its earnings on book in- 
vestment are comparable to those of 
companies with comparable risks. If 
its equity earnings rate meets this 
standard, the market price of its stock 
should similarly be comparable." 

He notes that witness Dr. Walter A. 
Morton and he both gave considera- 
tion to market prices in their studies, 
and that he relied in part on market 
prices in demonstrating the reason- 
ableness of a return of eight per cent 
on total capital for the Bell System. 

Mr. Scanlon says that the second 
argument is abundantly refuted in the 
record in this case. 

"It is true, of course, that the com- 
parable earnings standard is not ap- 
plied through an automatic process of 
calculation. Study, evaluation and, 
above all, informed judgment are 

required. But these requisites are not 
eliminated by replacing comparable 
earnings with the complex mathe- 
matical equations that have been used 
by opposition witnesses to estimate 
the cost of capital. . . . For example, 
the involved mathematical analyses 
presented by Dr. Thatcher and Dr. 
Gordon require estimates of risk com- 
parability or investor expectations as 
a starting point. If risk differentials can 
be determined with sufficient accu- 
racy for cost of capital purposes, they 
surely can be determined accurately 
for comparable earnings purposes." 

As to the third argument, Mr. Scan- 
Ion agrees that no two companies are 
alike in all respects. However, he 
points out, the comparable earnings 
standard requires only that the invest- 
ment opportunity in AT&T should be 
comparable to the opportunities avail- 
able generally in securities of other 
companies. Financial witnesses at- 
tested to continual investor compari- 
sons of AT&T with other companies. 

As to the fourth argument, Mr. 
Scanlon states he did not use the aver- 
age of all industrials or all utilities in 
his direct testimony. 

"Instead, I demonstrated that, in 
spite of differences, . . . the equity 
earnings rates of other companies 
tend to exhibit strong central tenden- 
cies. ... I relied primarily on the cen- 
tral tendencies ... in my analysis of 
the equity earnings rate required by 
AT&T. Beyond this, and to minimize 
controversy on this point, I made a 
downward adjustment in reaching my 
conclusion as to the appropriate range 
of equity earnings for AT&T . . ." 

After advancing other evidence in 
support of the comparable earnings 
standard, Mr. Scanlon concludes: 

"While I believe the comparable 
earnings approach to be superior in 
arriving at a rate of return, ... to the 
extent a cost of capital approach is 
used, there should be a recognition 
that a fair rate of return requires 
something more than a bare cost of 
capital. . . . any determination should 
contemplate a range of allowable 
earnings rather than a precise figure. 
This would afford . . . the incentive for 
earnings improvement through cost 
reductions and improvements in 
operating efficiency that redound to 
the benefit of the customer. 

". . . It is my opinion . . . that the 
range of 7V2 to 8V2 percent I have 
found to be necessary for total Bell 
System operations is the minimum ap- 
propriate for the totality of its invest- 
ment in interstate and foreign services 
here under review. 

"Lastly, it is submitted that there is 
nothing in the opposition testimony 
on rate of return that would warrant a 
finding of less than that range." 

Rebuttal testimony 
Robert A. Lovett 

Mr. Lovett's testimony is presented in 
rebuttal to opposition witnesses but 
is confined to broad policy considera- 
tions. He counsels regulatory agencies 
to use restraint and caution in connec- 
tion with higher debt, restrictive rate 
of return, or use of accelerated depre- 
ciation with flow through. This advice 
is predicated on the following funda- 
mental thoughts: 

National Dependence 

The total role of AT&T embraces 
enormous responsibilities exceeding 


those of other companies in scope 
and critical importance. Thus, the 
country is unusually dependent "on 
the sound health and continuing tech- 
nical excellence of the Bell System and 
the reliability of its performance." 

Mr. Lovett further states, "AT&T in 
its nationwide and intercontinental 
communication and allied services is 
an absolute essential to national de- 
fense." But its responsibility goes far 
beyond communications, he says, be- 
cause it includes activities in atomic 
development, early warning defense 
systems, missile guidance systems, an- 
timissile missile programs and highly 
classified projects vital to the national 

Technological Change 

Mr. Lovett stresses that the rapid 
change in communications technol- 
ogy has accelerated the rate of obso- 
lescence "which must be taken into 
account if the present high quality of 
service is to be provided in the future 
for both the public domestic economy 
and national defense." 

Capital Requirements 

AT&T's need for capital is so large 
and so continuous that it is "especially 
necessary ... to have a high degree of 
balance and flexibility in its capital 
structure so that it may successfully 
compete for funds and be able to take 
advantage of the changing tastes of 
investors and the fashions of the mar- 
ket at the moment." 

Attaining this balance and protect- 
ing AT&T's access to the securities 
market, according to Mr. Lovett, re- 

quires "exercise of managerial judg- 
ment of the highest order." 

Citing the railroad industry's 
"dreary record" in connection with 
low return on capital, the burden of 
debt, and the damaging effect of un- 
popularity with investors, Mr. Lovett 
says that "the telephone industry is 
considerably more fortunate ... be- 
cause it has given excellent service 
and maintained a high credit rating 
and therefore protected its access to 
the market." Mr. Lovett advises that 
reliance could be placed on AT&T 
management's past experiences and 
judgments in the capital field, under 
varying economic conditions, as sug- 
gested by the ancient saying that 
"good judgment is usually the result 
of experience and experience is fre- 
quently the result of bad judgment." 

"For all these reasons," Mr. Lovett 
asserts, "I am convinced that it would 
be most unwise to impose by regula- 
tion on AT&T and its management a 
specific and higher debt ratio, or to 
restrict unduly its rate of return, or to 
introduce debatable accounting prac- 
tices by financial short-cuts such as 
imposed accelerated depreciation for 
tax purposes with flow through to 
current earnings . . . The management 
of this company must pursue financial 
programs which will enable it to meet 
the unknown demands of the future 
in addition to its predictable respon- 

Bell System 
and CATV 

"The Bell System holds no threat to 
the future healthy existence of a pri- 

vately owned CATV incfustry," AT&T 
Assistant Vice President William M. 
Ellinghaus recently told a group of 
CATV operators. 

Although some independent tele- 
phone companies are becoming CATV 
operators, Mr. Ellinghaus said, the Bell 
System "never has, nor does it now 
plan to enter into the CATV business;" 
it is interested only in providing com- 
munication service for the transmis- 
sion of television signals. "We con- 
sider the provision of channel service 
for use in a CATV system to be a nor- 
mal common carrier function . . . simi- 
lar to the television network commu- 
nication service we have been 
furnishing to commercial and educa- 
tional broadcasters, local and state- 
wide educational systems, and busi- 
ness and industrial organizations for 
many years." 

Mr. Ellinghaus told the CATV oper- 
ators that the Bell System has no in- 
tention of discontinuing the granting 
of CATV pole attachment privileges. 
It is the Bell System's policy to give 
CATV operators a "free choice" be- 
tween a pole attachment agreement 
or channel service providing there is 
no pole attachment agreement in ef- 
fect or there are no other qualified 
operators applying for the same area 
at the same time. He also noted that, 
since the first tariff for channel service 
was filed in 1959, rate levels have 
been lowered considerably and are 
"subject to continual review and 
revision to incorporate cost savings 
and efficiencies made possible by the 
continuing improvement in the state- 


Business and the 
public interest 

Two AT&T executives have empha- 
sized the importance of business 
involvement in social problems. 

Speaking at Butler University, AT&T 
Board Chairman Frederick R. Kappei 
said businesses must generate the eco- 
nomic support for improvements in 
the national environment. "Private 
enterprise — I mean the spirit and 
enterprise of responsible individuals 
in the business community — is just 
as important to the attack on social 
problems as it is to the production of 
industrial goods." 

Among the foremost social respon- 
sibilities of business, Mr. Kappei said, 
is the creation of job opportunities 
for "the sadly disadvantaged." Even 
though companies cannot give jobs to 
people who cannot learn how to do 
them, ". . . we can go a long way to 
give disadvantaged people the chance 
to learn, and to help them to learn." 

He suggested that community prob- 
lems might be solved by a "systems 
approach" which he defined as "a 
rigorous effort to evaluate all the fac- 
tors of need and cost and performance 
that are involved in creating a useful 
system." In the context of community 
problems, the systems approach 
"would require the joint interest of 
people in business, labor and govern- 
ment," Mr. Kappei said. 

In another speech, John D. deButts, 
executive vice president of AT&T, 
stressed that business has an impor- 
tant stake in solving social problems 
and listed some of the actions that the 
future demands of business: "Build a 

better understanding of our objectives 
— or be misjudged. Involve with the 
community — or be shut out. Antici- 
pate social change — or be left behind. 
Accede to the public interest — or in- 
vite government supervision. Work 
with elected officials toward common 
goals — or lose their support." 

Business must "take a look at major 
national problems, then bring busi- 
ness know-how and efficiency to bear 
in helping to solve them." Among 
these problems are: unempoyment, 
education which "leans heavily on 
contributors from industry," interra- 
cial efforts where "leadership from 
business ... is surely essential and 
desirable," welfare programs in which 
"we who are experts in building a 
sense of responsibility among our em- 
ployees can exert a definite influence" 
in motivating people to help them- 
selves, and urban renewal where "per- 
haps the greatest need is to be found, 
because poverty, civil rights and the 
broadest spectrum of social questions 
have their vortex in the cities." 

Mr. deButts also suggested a crea- 
tive dialogue between business and 
government. Emphasizing that the re- 
sponsibility is mutual, he posed these 
questions to business: "Do we de- 
velop knowledge of elected officials 
and their problems ... do we keep 
them advised of our situation ... do 
we really help them in their efforts to 
do a good legislative job ... do we 
try to learn the political ropes?" 

"Involvement in community activi- 
ties is not only good citizenship — It Is 
also good business," Mr. deButts ob- 
served. "A solid demonstration of 

social responsibility on the part of all 
business from the corner store to the 
corporation not only raises the stand- 
ards of the community but also those 
of business." 

changes to affect society 

The communications revolution now 
in progress will have a profound im- 
pact on all society, AT&T Board Chair- 
man Frederick R. Kappei said last 
month in Chicago. He discussed four 
major aspects of this revolution, in- 
cluding advances in wordwide com- 
munications which will benefit inter- 
national understanding. 

Turning to satellites, Mr. Kappei 
said their present use is for interna- 
tional service, but they will also be 
an important factor in providing 
domestic service, especially if "tied in 
with the common-usage network to 
which the entire public has access." 

The third aspect concerns the in- 
creasing variety of communications 
instruments, systems and services that 
are being introduced. "Methods for 
sending, receiving, handling, storing, 
retrieving and displaying information 
will steadily grow more capable, more 
versatile, more useful to mankind." 

Fourth, the rapid increase in com- 
munications between people and 
computers will have "great con- 
sequences. . . . The most versatile 
problem-solving technology yet de- 
vised will become the low-cost ser- 
vant of the average man . . . over the 
lines of communications, local and 
national networks." ■ 



American Telephone and Telegraph Company 
195 Broadway, New York, N. Y., 10007 

Bulk Rate 
U S. Postage 


Hartford, Conn. 
Permit No. 3766 

Librarian. Perioiical Dept. 
Kansas City Public Libra— 
Kansas City, '!^o., 6. 



March/April 1967 


^'^'^^telephone magazine 

A Man and His City Page 36 



telephone magazine 

Leighton C. Gilman, Editor 

Donald R. Woodford, Managing Editor 

Al Catalano, Art Director 

Alix L. L. Ritchie, Associate Editor 

Harold N. Schott, Jr., Assistant Editor 

H. I. Romnes, Chairman of the Board 
Ben S. Gilmer, President 
John D. deButts, Vice Chairman 
Charles E. Wampler, Secretary 
John J. Scanlon, Treasurer 


ON THE COVER - Rav Garcia is a man deeply committed to 
his communily, East Lns Angeles, Calif. Ray, who expresses his 
views on the involvement of business and the individual in the 
problems of the cily starling on page 38, has recently been 
appointed field deputy of Lt. Governor Robert Finch and will 
soon be taking a leave of absence from Pacific Telephone to 
serve in a liaison capacity between the Spanish-speaking com- 
munity and slate officials. 

2 Costs and How to Cut Them 

10 A Summons to Excellence 

15 The Promise of Holography 

19 The Interstate Rate Case 

26 The All-Purpose Picture Network 

34 Way-Out Ways to Communicate 

38 A Man and His City 

46 Bell Reports 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

Big savings — $30,000,000 last year- 
result from programs 
that assure accurate reporting, 
adequate recognition 
and management support 

It was a $2 million a year victory in the war on costs- 
substitution of factory-grown, artificial quartz crystals 
to replace the costly, hard-to-get natural material. 
But Bill Watson, an engineer at Western Eiectric's 
Merrimack Valley Works in North Andover, Mass., 
had no time to cheer. 

Despite the savings in material costs, the tall engi- 

neer knew there must be better ways of testing the 
crystal units that are used to control frequencies in 
transmission systems. "The trouble was, if something 
went wrong in making the units, feedback of the 
cause was critically delayed — even an hour would 
be too long. By then the damage was done; a whole 
batch of crystals might be ruined." 

After long hours of study. Bill submitted a proposal 
for an on-line, real-time computerized testing system 
to the plant's cost reduction committee. The com- 
mittee liked what it heard: "the use of new tech- 
nology for process control, audit and quality reports 
— now, while it's happening," and estimated savings 
of about a half a million dollars a year. 

The experience of Bill Watson is typical of hun- 
dreds of engineers in the Bell System's manufacturing 
and supply unit, which last year processed 5,983 cost- 





cutting proposals. And most of these recommenda- 
tions came from engineers who consider finding new 
ways of producing quality products at less cost — 
and keeping the cost of telephone service down — "a 
way of life," as Watson puts it. 

Like other manufacturers— and industry in general- 
one of the biggest hurdles that Western Electric has 
faced in its pursuit against rising labor and material 
costs is the need to create cost awareness and a cli- 
mate of change and innovation. But over the years- 
its formal cost reduction program dates back to the 
mid twenties— Western has been able to instill in its 
engineers an attitude that changes designed to make 
a product at less cost are as necessary as meeting 
production schedules, attaining quality performance 
standards, or introducing new products. 

"We've found that we must put the responsibility 

for cost reductions squarely on the shoulders of the 
product and planning engineer," says Quentin W. 
Wiest, general manager for engineering at Western 
Electric. "Give him the responsibility and hold him 
accountable, and he'll come through. 

"It's only natural to give the primary responsibility 
to the engineer. After all, the philosophy of low 
costs starts with good engineering, or what we 
call cost avoidance . . . making sure you have ef- 
fectively engineered the job so the item is produced 
at the lowest possible cost right from the start. By 
giving him the responsibility, you can make the best 
use of his talents and he can demonstrate his pro- 
fessional competence," explains Wiest. 

"I don't believe full-time cost reduction specialists 
are the best way to achieve cost reduction. It is per- 
fectly true that other duties command the engineer's 

attention as well as cost reduction, but this doesn't 
come close to offsetting the benefits of the inti- 
mate knowledge of the product or planning engineer 
who works on the job. The product engineer who 
lives with cost problems is the expert . . . even though 
he may freely consult specialists," Mr. Wiest says. 

Western Electric has learned that a good cost re- 
duction program is not a hit-and-miss proposition. 
Down through the years, it has formalized the pro- 
gram through the evolution of a series of scientific 
guidelines designed to make sure the company is 
really saving money through cost reduction propos- 
als, and to establish an equitable means of giving 
credit to the individuals and organizations who are 
responsible for the work. 

"When you formalize a program like this, you get 
a commitment from top management, and at the 
same time, set up the necessary management con- 
trols," points out William G. Seyter, who is in charge 
of coordinating cost reduction at Western Electric's 
headquarters in New York. "With appropriate con- 
trols, you can determine if estimated savings are 
actually attainable. You've got to be careful, though, 
that you don't get involved with so much red tape 
that you inhibit and frustrate the effort. Burdensome 
controls can be as bad as no controls." 

How does the program work? Bill Watson's pro- 
posal for computerized testing is an example: 

The quartz crystal unit shop used a system of 
tab cards to help evaluate the reasons why some 
batches of tiny crystal units do not measure up to 
the superfine degrees of tolerance needed to control 
frequencies in transmission systems. The tab cards 
are slow: it usually takes about a week to collect 
and process the data. By then defects have occurred 
and many units may be ruined. 

"It seemed to me," Watson reports, "that modern 
computer technology could be put to use to improve 
our process methods and quality control. After some 
preliminary study, I reviewed it with four other 
groups that were involved, and after estimating the 


"Western Electric's cost reduction program 
is based on the premise that engineering 
effort, beyond that necessary to make the 
product, is worth every cent it costs, but 
savings must exceed costs," states Quentin 
W. Wiest, general manager for engineering. 

"Management at all levels must have com- 
pelling, practical reasons for stimulating cost 
reduction and ensuring the program's con- 
tinuance as a traditional element of the 
Company's operations." 


"Ordinarily, good engineering— a gathering of new mate- 
rials, new methods, new developments and new skills 
under new conditions at the right time— characterizes the 
most significant cost reductions." 

"Secondary but ipdispensable factors are good engineer- 
ing supervision, successful group effort spearheaded by 
the product engineer involved, and a cost-conscious 
management willing to cope with change." 

savings and how much the new process would cost, 
went to the cost reduction committee." 

The committee, composed of top engineering 
management and representatives from other groups 
in the plant, agreed to recommend spending about 
$530,000 to purchase new equipment, rearrange the 
shop layout, and develop the computer program. It 
was worth the effort and the money, they felt, be- 
cause they estimated savings at $372,900 the first year, 
averaging out to $530,700 per year over the next five 
years. In addition, it would make maximum use of 
facilities and increase yield. 

The critical point in the life cycle of any proposal 
occurs when the engineer presents his recommenda- 
tion to the cost reduction committee, according to 
Morris Burakoff, the department chief at Merrimack 
Valley who is responsible for coordinating cost 
reduction activities there. 

"First of all, the engineer has to demonstrate that 
he's done his homework, that he knows the answers 
to a whole batch of questions that might come up. 
Next, the committee members should have a pretty 
good idea of what's ahead for the product under 
discussion: if it is going to be replaced by something 
new, for example. In the end, the committee must 
decide if the proposal is worth the time and the 
money to implement." 

One of the biggest cost reduction cases in West- 
ern's history is now under way. Bell Telephone Lab- 
oratories and Western have jointly developed a new 
kind of wire used in installing phones. It's smaller 
than the former wire and has a slippery insulating 
jacket that will reduce the time and effort needed to 
pull it through conduits in apartment and office build- 
ings. Cost savings to Western Electric will amount to 
about $1.4 million a year; labor savings may total $20 
million for the Bell Telephone companies. 

"Take one cost reduction step at a time and introduce it smootiily, 
quicliiy and practically as possible, without insisting on the com- 
plete development of the whole idea," explains Engineer William 
D. Watson, left, who reviews an idea with his manufacturing 
counterpart in the Quartz Crystal Unit Shop. 

'E?s;s»«,._ '~ ■ 1 

"It's not enough to say that cost reduc- 
tion is important. You've got to give 
credit and recognition. And if results 
count in evaluating performance, it is 
important," according to Morris F. Bura- 
koif of WE's Merrimack Valley Works. 

"Fair and equitable controls in results 
reporting are absolutely essential, but 
you can over control. The balance must 
be established by experiment," states 
William C. Seyter, manager of engineer- 
ing planning at Western Electric's head- 
quarters in New York. 

"Everybody can suggest ideas," says Marvin Hill who coordinates 
cost reduction at Merrimack Valley. "People on the production line, 
as well as our outside supplier'-, are encouraged tn work with the 
engineers to hold costs down" 

"If you're really after big savings, you can't be 
afraid to spend money," Mr. Burakoff points out. 
"Today, technology is so sophisticated that it costs 
a lot of money to put some of these ideas into effect. 

"At the same time, you've got to realize that you 
can't win them all. You may have to spend some 
money to find out that you can't save what you 
thought you could. Or sometimes you can try some- 
thing and it won't work. Try it again some other time." 

The continual pursuit of cost reduction is another 
essential ingredient in the Western Electric program. 
Although the schedule for any cost reduction case 
includes a "close case" date, none is ever filed away. 

"We don't just take one shot at it, prove it in, 
then sit back with a contented sigh and collect the 
savings. You have to keep right on working with the 
same product, always looking for ways to improve 
it or cut the cost of making it," adds Marvin Hill, who 
helps Burakoff coordinate cost reduction efforts at 
Merrimack Valley. 

Motivators: achievement, recognition 

In the production of one small item — deposited 
carbon resistors, for example — 20 separate proposals 
to cut costs were processed during the past five 
years. The cumulative savings over that time have 
amounted to over $553,000. 

The product and planning engineers feel the sense 
of achievement and the recognition they get are the 
biggest motivators in developing new ways of cutting 
costs. "Cost reduction is the only program I know 
of where you can go before the top management and 
tell them, 'Look, we can save you so much money by 
doing such and such.' There aren't many places in 
industry where this is possible. It's a great opportu- 
nity," states Leonard J. Winn, a product engineer at 
the Merrimack Valley Works. 

"There's a lot of personal satisfaction involved 
when you're working on a good case. Not only do 
we know that our performance is being evaluated— 
partially, at least — on the basis of our cost reduction 

Cost and Price Comparisons-Januafy 1,1967 wilt! U: > Inmi L 

effectiveness, but we also know that there is direct 
competition between Western manufacturing 
plants," Mr. Winn points out. "It's a great competi- 
tive challenge, a working test of our professional 

Winn and other Western Electric product engi- 
neers work against a yearly cost reduction savings 
goal. Each engineering department and each manu- 
facturing location has a similar goal — as does the 
entire company. Fixing the target — setting the goal — 
starts with each enginering department which each 
fall presents its firm plans for cost reduction for the 
next year and its preliminary views of other possi- 
bilities. The department's goal, an amalgam of indi- 

"Presenting a cost reduction proposal to the committee is the 
kind ol challenge an engineer lives tor," states Charles W. Hig- 
gins, left, ol WE's Merrimack Valley Works. "His ideas must meet 
rigid standards, both technical and economic." 

vidual engineers' targets, is then dovetailed into a 
plant goal which, in turn, is combined into a com- 
pany-wide goal. This year's target: $35 million. 

Although the formalized engineering cost reduc- 
tion program is the most significant, it is not the 
only means by which Western Electric seeks to keep 
the price level of its products low. The engineer's 
primary responsibility is planning for production at 
the lowest possible cost — cost avoidance — and this 
is the most important effort. 

Like other manufacturers. Western Electric has an 
employee suggestion plan which has produced more 
than half a million suggestions since it was inaugu- 
rated in 1944. About one-quarter of these have been 
adopted. Result: estimated savings of $13 million. 

In addition. Western has a group wage incentive 
plan, which provides a bonus of 15 per cent of the 
basic wage rate when the work group's efficiency 
meets the carefully spelled-out standards. As the 
group's efficiency goes above or falls behind the 
standard, the incentive factor in their wages rises 
or is reduced accordingly. 

Another manufacturing program is the standard 
cost system which sets up a yardstick — an objective 
— for each element of costs. Standard costs tell the 
first-line supervisor how much his operation should 
cost, thereby making it possible for him to determine 
whether he spent more or less than he should have 
for labor, materials, or other expenses under his con- 
trol. It also provides a comparison of performance 
between work groups in any plant. 

The effort goes beyond manufacturing. Western 
Electric's purchasing and transportation organization 
has a sustained program to reduce costs. The service 
division has been registering substantial savings in its 
distribution, installation and equipment engineering 
activities for many years. 

To cite one case: a new solvent polishing process 
is being developed to restore telephones to their 
"like-new" appearance which will enable 75 per cent 
of the plastic parts to be reused, instead of only 45 

per cent with the present buffing process. With more 
than 16 million telephones being restored at the 35 
Western Electric distribution centers across the na- 
tion, annual savings are estimated at nearly $2 million. 
What does it all add up to? Last year, manufac- 
turing cost reduction savings amounted to over $30 
million and, over the past decade, $200 million. 

Price level 15% below 1950 

The result of this cost reduction effort is that today 
the price level of Western Electric's products is about 
15 per cent below 1950 — despite increases of 104 
per cent in wages and a 46 per cent increase in the 
cost of raw materials. 

What does this mean to the Bell System operating 
companies and their customers? The telephone set 
itself serves as a good illustration. Since the present 
design of the standard desk telephone was intro- 
duced in 1949, 2,300 separate changes have been 
made to improve its performance and lower its cost. 
The result: a better telephone for 25 per cent less 
than it cost originally. 

This, of course, has the effect of helping the Bell 
System operating companies keep their needs for 
new capital to the lowest possible level, makes more 
money available for service improvements, and — 
in the case of some service offerings — makes it pos- 
sible to reduce rates to the telephone user. 

"This achievement," Western Electric President 
Paul A. Gorman says, "has helped hold down the 
cost of telephone service to the public. It was pos- 
sible chiefly because of cost reduction. 

"This policy of passing on in lower prices the 
economies we have achieved — or will achieve — as 
a result of our intensive drive to cost reduction has 
contributed much to telephone progress. It is our 
membership in the Bell System that makes our pric- 
ing philosophy possible, just as it makes possible — 
just as it dictates — our total commitment to the goals 
of the Bell System as a whole." D 

H. I. Romnes, on February 1, became 

chairman of the board and chief executive officer 

of the American Telephone and Telegraph Company. 

Here are some of the ideas and opinions 

he has expressed about the business 

in which he's worked 38 years 

and the society of which it is a part. 

The pervasive theme of his remarks is his emphasis 

on quality — in service, in workmanship, and in life. 

In today's complex society, he sees management's job as 

A Summons to Excellence 

What is Our business? 

Our business, I'm glad to say, faces an uncertain 
future. Not only do electronic switching and com- 
munications satellites offer potentialities we can 
barely imagine now, but so does the laser with its 
capacity to transmit — and to store — vast amounts of 
information in a beam of light. So does the wave 
guide cable now under development by which we 
hope to be able to transmit a third of a million simul- 
taneous conversations over a single "pipe." And so, 
too, do recent developments in Pulse Code Modula- 
tion, a system that promises as dramatic economies 
in short-haul transmission as the waveguide cable 
does for long haul. . . . 

In our business the potentialities of a new tech- 
nology are a long way from being "topped off." As 

a matter of fact, if there is one overriding lesson in 
the history of the telephone, it is that growth and 
progress depend on a constant probing for new po- 
tentialities in communications service. 

Our business was born of research and it has grown 
through research. . . . This is our investment in the 
future. . . . What its yield will be is beyond precise 
prediction. But I do know we have no more cherished 
asset than our capacity to change, to innovate. 

Chamber of Commerce 
Baltimore, Maryland 
November 8, 7965 

Surely we can never forget — in applying new tech- 
nology to our own business practices — that the 
ultimate test of everything we do is the satisfaction 
and convenience of the customer. He is the one who 
shouldn't be folded, spindled or mutilated. 

U. S. Indeperident Telephone Association 
New York City 
October 18, 7965 


We number our customers in the millions. . . . But 
we serve them one at a time. 

More and more, it seems to me, the public's opin- 
ion of the telephone company will reflect its sense of 
the personal interest we show in all our dealings. 
... It is because of this desire — the natural, under- 
standable desire for personal attention— that we have 
made it a precept of our business that, whatever mira- 
cles automation might achieve, our customers will 
always have access to a real, live human being — an 
employee equipped and trained to be helpful. 

NAWGA Convention 


March 7, 7966 

Managing Change 

The management of change in our society is a part- 
nership — a partnership between enterprise and inno- 
vation, between invention and investment. Each has 
obligations to the other — enterprise to support the 
quest for truth from which all new things come, to 
run the risk of untried ways; innovation to provide a 
continuously evolving practical specification for 


Ohio State UniversitY 

Conference of Engineers and Architects 

Columbus, Ohio 

April 28, 7967 

... a business information system, if it is to be suc- 
cessful cannot be imposed — appliqued — on an 
organization. Indeed, were you to attempt to do so 
— and however elegant your design — its purported 
beneficiaries would almost certainly resist it. And 
they would be right in doing so. 

To the technologist, their resistance might seem 
like sheer human cussedness, mankind's traditional 
response to any threat to his accustomed ways. But, 
more fundamentally, any system that does not grow 
out of an organization's own experience and that 


does not match its own definition of its needs and the 
results it seeks, just can't be a very good system. 

Participation isn't just a necessary precondition of 
acceptance; it is a prerequisite of effective design. 

International Data Processing Conference 
Chicago, Illinois 
June 22, 7966 

. . . The introduction of a business information system 
is so intimately bound up with a company's opera- 
tions, its organization structure, the decision-making 
power of its managers . . . not to mention its respon- 
siveness to its customers ... as to require the 
most comprehensive management consideration. . . . 
In some organizations, the installation of a business 
information system has had the effect of drawing the 
authority for decision-making closer to the top. And 
in some organizations this may be all to the good. 
. . . But in other organizations — and I would count 
the telephone business among them — the need to 
respond flexibly to the unique needs of each com- 
munity, each customer, is paramount. The design of 
a business information system for such a company 
will be quite different from the company with the 
accent on centralization. But the need for such a sys- 
tem — and its value — may be no less. Its purpose, 
however, will be to provide the local manager the 
context of information he needs to make his own 
decisions as to how best to serve his customers. 

Industrial Communications Association 
Pittsburgh, Pennsylvania 
May 4, 7965 

The Individuars Role 

First in my list of the individual's responsibilities to 
society is the responsibility to do his job well— assum- 
ing, of course, that the job is a useful one. Being 
merely adequate is not enough. Society will remain 
static if the standards we set for today's attainment 
are no higher than yesterday's and tomorrow's no 

higher than today's. The "pursuit of excellence" may 
be an over-worked phrase. But it is the root of prog- 
ress, it is something we owe not only to society but 
to ourselves. 

Science and Engineering Club 
Kearny, New lersey 
lune 28. 7960 

. . . Increased mechanization in shop and office — 
perhaps paradoxically — is actually increasing the 
significance of human effort. With automation the 
investment for which each individual employee is 
responsible is growing. And what he does with the 
complex and expensive facilities at his command is 
coming to have a more critical bearing on our suc- 
cess. The demands of the new technology are chang- 
ing the composition of our work force, putting 
greater emphasis on individually acquired skills. 
. . . The progress we seek cannot spring from an or- 
ganization chart, however artfully designed; it can 
only come from people. . . . More and more it will be 
the man that makes the job rather than the other way 
around. Personal attributes — initiative, creativity, 
even that old-fashioned one, responsibility — will be 
the factors that spell the difference between success 
and failure in tomorrow's industry. 

Reading and BerAs County 

Chamber of Commerce 
Reading, Pennsylvania 
lune 6, 7967 

Our Society and Its Needs 

Equal opportunity is a fine phrase. Making it come 
true is an arduous, sometimes painful process. But 
there are many good reasons why management needs 
now to demonstrate not merely good faith but prac- 
tical initiative in support of this basic American tenet. 
The good opinion of the world is only one of them. 
A more compelling one is that prejudice breeds 
waste, the most tragic kind of waste, the waste of 
human resources. But in the final analysis there is one 


reason above all others for giving our best manage- 
ment attention to making equal opportunity come 
true — and that is because it is right. 

Chamber of Commerce 
Associated Industries of Arkansas 
Little Rock, Arkansas 
November 8, 7961 

Today our country is attacking the twin problems of 
poverty and discrimination by a strange and some- 
times confusing mixture of means, public and private, 
mandatory and voluntary. Federal and local. 

This arena will be the principal testing ground of 
the vitality of local initiative in the months and years 

1 for one have no doubt about the sincerity of our 
country's commitment to the attack on poverty and 
discrimination. How long it will take 1 don't know. 
But the job will get done one way or another. 

How it is done, though, can make a great deal of 
difference as to whether the balance of decision-mak- 
ing in this country swings toward Washington or 
swings closer to home. 

Business people can have a great deal to do with 
the outcome. 

... If enough trained business intelligence is 
focused on these problems — to help sort out the 
priorities, to help match objectives to resources 
realistically — the job is going to get done sooner and 

Wisconsin Manufacturers Association 
Milwaukee, Wisconsin 
May 17, 7966 

We [in business] need to demonstrate our concern 
for the larger interests of society through the applica- 
tion of business-trained intelligence to problems that 
transcend the special interests of business and affect 
the whole community. There are problems cut to the 
measure of each of us — hometown problems like 
schools, slums, traffic and taxes; regional problems 
like transportation, water resources, industrial devel- 
opment and the like. 

... To stand aside in the face of these problems is 
to deny our communities their most needed resource 
— responsible leadership. It is with poor grace that 
businessmen decry the growth of big government, 
the centralization of power and authority in Wash- 
ington, in the absence of taking up the responsibility 
themselves, where it belongs — at the local level. If 
we don't, I'm afraid we won't be able to complain 
that our responsibility has been taken away. We shall 
have given it away — and some of our freedom with it. 

American Management Association 
New York City 
February 7, 7967 

Business and Government 

... It would be unfortunate, it seems to me, if some 
of the more dramatic encounters of business and 
government should lead our people to the conclu- 
sion that there is a necessary and inevitable conflict 
between public and private interests. 

Should this happen, the American people will have 
lost sight of that feature of our economy that has 
made it unique among the nations of the world, that 
has brought us further, faster than any system of eco- 
nomic organization yet devised and which remains 
our best hope for growth and progress in the future. 
I mean the freedom of men and organizations to 
strive competitively to excel and to derive appropri- 
ate rewards for achievement. It is precisely in the 
pursuit of private aims that we have felt the public 
interest to be best served. 

Chamber of Commerce 
Winston-Salem, North Carolina 
May 17, 7962 

Business and Youth 

I believe the best of youth remains today what it 
always has been — purposeful and idealistic, ambi- 


tious to be of some service in this world. Does busi- 
ness provide scope for this ambition, this idealism? 
Career choices being made in our schools and col- 
leges will largely turn on the answer to that question. 
In the face of cynicism with respect to the motives, 
ethics and standards of business there is no more 
serious charge on American management today than 
to convey to our young people that a career in busi- 
ness will challenge the best that is in the best of them. 

Associated Industries ol Massachusetts 
Boston, Massachusetts 
October 26,1961 


The potentialities of communications are enormous 

— and quality is the key to the future. The fastest 
growing aspect of communications today is not per- 
son-to-person but machine-to-machine — data trans- 
mission. Data transmission imposes vastly more 
stringent demands of the capabilities of communica- 
tions circuits than do voice conversations. At the 
fantastic speeds at which data traffic will be handled 

— thousands or even millions of bits per second — an 
otherwise imperceptible interruption or irregularity 
in transmission could lead to disastrous distortions in 
vital statistical information — a missed decimal point, 
for example. That we are today able to envision a 
time when data transmission may rival voice traffic is 
a tribute to the people in our laboratories and fac- 
tories who have been able to build a new order of 
quality into the countless components of our com- 
munications network and thus achieve a whole new 
order to capability. 

IRE-EIA Meeting 
Toronto, Canada 
November 13, 7962 

... it does seem to me that the standards of excellence 
we in business set for ourselves in this day and age 
must go beyond the customary measures of efficiency 
and convenience and profitability and take account 
of the human qualities on which more and more our 
performance will be judged. 

For all day, every day, the earnestness with which 
we in business pursue our professed standards of 
high value at low price are being quietly appraised. 
The integrity of our business relationships, the 
craftsmanship of our products, the sincerity of our 
dedication to service — all are being tested by mil- 
lions of Americans — one at a time. 

On the outcome of this appraisal, not merely the 
prestige of business but its future freedom and 
vitality will depend. 

NAWGA Convention 
Chicago, Illinois 
March 7, 7966 

. . . business freedom in the sense that I am thinking 
about it is not the heedless exercise of self-interest. 
It is a freedom that must be earned. To my mind, 
earning it requires that we recognize that responsi- 
bility to the public interest is an explicit function of 
business management in our time. 

That responsibility calls, first of all, for a renewed 
initiative in support of industry's basic obligation to 
the public — enhancing the economic performance 
of our country and enlarging the opportunities of its 
people. But it calls as well for a sensitivity to human 
needs and, in the face of the economic, social and 
ethical problems that have added complexity to to- 
day's management job, it calls for the added imagi- 
nation to discern and the courage to do what is right. 
It is a challenge to the character and competence of 
American business. It is a summons to excellence. 

Chamber of Commerce 
Winston-Salem, North Carolina 
May 17, 7962 


The Promise 
of Holography 

Lasers and "lensless" photography 

techniques can now produce 

holograms of three-dimensional, 

multicolored images that "float" 

in midair and may revolutionize 

storage and retrieval of information 

For years scientists have been groping for ways to 
preserve and reproduce objects in three dimensions. 
The best that have been produced thus far have been 
stereoscopic devices and cinerama motion pictures — 
both of which give the impression that you're seeing 
the object in 3-D — and cumbersome Polaroid glasses 
that give the effect of three dimensions. 

But scientists at Bell Telephone Laboratories and 
the University of Michigan have developed a method 
by which three-dimensional, multicolored images 
can be seen by shining an intense beam of light on a 
hologram, a photographic plate or a piece of film 
that records an image of an object illuminated by a 
laser beam. The realism of a hologram is so great that 
the image appears to "float" in midair and is prac- 
tically indistinguishable from the real object itself. 

Although its ability to reproduce a three-dimen- 
sional image is one of its most important properties, 

The realism of holograms is demonstrated by David Melroy ol 
Bell Labs who holds a Trimline® Touch-Tone® telephone (right) 
beside a three-dimensional photographic image of the same 
telephone as it is illuminated on a piece of translucent film. 


. 'fe'V 







To make a hologram, laser beams are mixed, then split into two beams: an illu- 
minating beam that shines directly onto the object, and a reference beam thats 
reflected by a mirror onto photographic film. By shining a beam of light onto 
the film, a three-dimensional multi-color image of the object is reproduced. 

Three conventional pictures of a single hologram photographic plate demonstrate the ability of a 
single hologram to show three sides of a subject. When viewed against a yardstick, it is possible 
to see the left side of the chess figures, the head-on view, and the right side of the figures. 

'ooking specks and whirls on the holographic plate (above) record the 
pattern produced by the interaction ol two laser beams. When illu- 
id by a beam of light (below), the original subject is recreated in a three 
)sional image which "floats" either before or behind the hologram. 




L - " 




the hologram has other characteristics that make it 
attractive to scientists and engineers: 

■ A hologram does not require any lens to produce 
an image, 

■ A hologram can produce multicolored images 
from film emulsions which normally produce only 
black and white images, 

■ A hologram can be broken into pieces, yet each 
piece can still produce the entire image, and 

■ A single hologram can record information about 
many different objects. 

The potential of the hologram technique is implied 
in its name which is derived from the Greek roots 
holo, meaning "whole," and gram, meaning "writ- 
ing" or "record." A hologram's capability of storing 
large volumes of information in a compact area may 
make it a particularly valuable element in the Bell 
System's nationwide communications network. For 
example, Bell Labs scientists are investigating the 
possibility of applying holography techniques to the 
storage and retrieval of information for switching, 
information services, and the transmission of large 
volumes of visual information. 

How is a hologram made? One way to answer this 
question is to compare how an ordinary photograph 
is made with the means of making holograms. 

When taking a conventional picture, the subject is 
usually illuminated by sunlight or light from a lamp. 
An image of the subject is formed by a lens focused 
on photosensitive film that records the image by 
responding to the intensity of light reflected from the 
subject. A black and white photograph, therefore, is 
made up of black, gray and white tones that corre- 
spond to variations in brightness of the subject. 

Holography, however, differs in two basic ways: 
(1) no lens or image-forming device is needed be- 
cause no focused image is formed on the hologram, 
and (2) the object must be illuminated by "coherent" 
light, such as that provided by a laser. The use of 
coherent light enables special patterns of light waves 
to be recorded on the film, in addition to variations 


Bell Laboratories' Larry H. Lin (letl) and Ken Poole make 
the multicolored hologram which is seen on the preceding page. 

in brightness. (Coherent light, which contains light 
waves of nearly a single wavelength, provides a scale 
for measuring the distance the light has traveled and 
the direction from which it came.) 

A hologram records a visual pattern produced by 
the interaction of two coherent light waves from the 
laser: one that is used to illuminate the holographic 
plate, and the other to illuminate the subject. Light 
waves that illuminate the subject reflect back to the 
plate and interact with the first light wave on the 
hologram. This interaction of light waves produces 
a combination of lines, specks and whirls which may 
look like an out-of-focus fingerprint or a smudged 
or darkened photo negative. 

When this combination of smudges is illuminated 
— either by another laser beam or a beam of light 
from the sun or a flashlight — the original subject 
will appear in three dimensions, apparently floating 
in midair. And if different colors of laser light are 
used to illuminate the subject, a multicolored holo- 
gram will be produced. 

The basic principles behind holograms were first 
described in 1948 by Dennis Cabor of the Imperial 
College of Science and Technology in London. For 
many years thereafter, no practical source of coher- 
ent light was available and work in holography was 
limited. In 1960, however, the advent of the first laser 
sparked renewed interest in holograms. This interest 
was stimulated mainly by experiments of scientists 
at the University of Michigan's Institute of Science 
and Technology. 

About two and one-half years ago. Bell Labs scien- 
tists at Murray Hill, N. J., recognized holography's 
capacity to store vast amounts of data on small slides, 
in 1965, two BTL scientists discovered a way of 
making two-color hologram images by laser light, and 
a year ago, members of the electron tube and optic 
device department teamed up with University of 
Michigan scientists to create two-color holograms 
that could be viewed with the light of a high-intensity 
lamp rather than a laser. 

Studies now under way are investigating the pos- 
sibility of using holograms to make more precise 
masks for microminiature integrated circuits. Other 
research work is under way to see if television and 
Picturephone® systems can transmit three-dimen- 
sional images. 

But to make a hologram today is a formidable task. 
To produce the holograms pictured here required 
three days to align the optical components, five beam 
splitters, five lenses, 13 mirrors, the hologram plate 
and subject, and a laser atop a three-ton table de- 
signed to avoid shock. (If the object moved as much 
as two ten-millionths of an inch, the variations would 
have shown on the hologram and distorted it.) 

Whatever its potential may be, holography is now 
about at the same stage of development as photog- 
raphy was about 130 years ago when Louis Jacques 
Mande Daguerre, a French artist, exhibited a picture 
of some small busts, a basket and a painting. Yet the 
promise of holography may be as great as Daguerre's 
primitive photographic efforts. D 


The Interstate Rate Case 

AT&T's proposed findings emphasize the need for rate of return in the area of 8% 

AT&T submitted, its proposed findings and conclusions and legal briefs 
for Phase One of the interstate rate case to the Federal Communications 
Commission in late March. 

In a letter of transmittal, AT&T Vice President F. Mark Garlinghouse 
reemphasized the need for Bell System earnings "comparable with those 
of other companies offering competing investment opportunities" so 
that continuously improving, low-cost communications service may be 
provided. "By this criterion, our evidence shows," the letter stated, "the 
Bell System needs a return averaging at least 8% on the total investment 
in its interstate business." 

The letter also dealt with rate of return and three related issues covered 
in the initial phase of the rate case: accelerated depreciation, rate base 
items, and separations procedures. "On each of these questions," Mr. 
Garlinghouse said, "our position reflects the basic responsibilities of our 
businesss: providing the public an ever-improving, low-cost communi- 
cations service and maintaining the financial strength and integrity neces- 
sary to fulfill that objective in the years ahead." 

Following is the text of Mr. Garlinghouse's letter: 

Rate of return 

We believe that to provide excellent 
and continuously improving com- 
munications service at low cost, the 
Bell System must produce earnings on 
its share owners' investment that are 
comparable with those of other com- 
panies offering competing investment 
opportunities. By this criterion, our 

evidence shows, the Bell System needs 
a return averaging at least 8% on the 
total investment in its interstate busi- 

This need is shown by the testimony 
of our principal financial officers, 
experienced in raising the huge 
amounts of capital necessary to meet 
the public's need for our services, and 
it is firmly supported by highly quali- 

fied witnesses from the financial com- 
munity, as well as by leading econ- 
omists and outstanding university 

In the course of our presentation, 
Ben S. Gilmer, president (then execu- 
tive vice president) of AT&T, defined 
the basic objective of our business as 
an "ever-improving service" and 
stressed the importance of continuing 
technological innovation as the means 
to that end. But, he pointed out, real- 
izing our full potential for better serv- 
ice through innovation depends on 
the opportunity to achieve good earn- 

"Earnings prospects that encourage 
a commitment to the future," Mr 
Gilmer said, "will help assure con- 
tinued leadership in the technology 
of common carrier communication." 
(Bell Ex. 31, p. 7) 

In the view of distinguished econo- 
mists appearing in our behalf, deter- 
mination of an appropriate rate of re- 
turn for our business must give full 
account to the role of communica- 
tions as a critical determinant of the 
nation's ability to meet its economic 
goals. A minimum rate of return aimed 
at saving a small fraction of the pub- 
lic's telephone bill would stultify 
growth and innovation, retard the 
economies that derive from techno- 
logical advance and thereby frustrate 
the public's larger interest over the 


'Mr. Scanlon's conclusions were corrobo- 
rated by independent studies prepared by Dr. 
Walter A. Morton, Professor of Economics 
and a noted lecturer and author in the field 
of public utility economics, and by Dr. Irwin 
Friend, Professor of Economics and Finance, 
The Wharton School of the University of 

'The five were: F. |. McDiarmid, Vice Pres- 
ident of Lincoln National Life Insurance 
Company; Charles W. Buek, President, Unit- 
ed States Trust Company; Gustave L. Levy, 
Chairman of The Management Committee, 
Goldman, Sachs & Co., Vice Chairman of 
The Board of Governors, New York Stock 
Exchange; John H. Moller, Senior Vice Presi- 
dent, Merrill Lynch, Pierce, Fenner & Smith; 
Adrian M. Massie, former Chairman, Trust 
Committee of Chemical Bank New York 
Trust Company. 

'These witnesses were: Robert R. Nathan, 
Alexander Sachs, Paul A. McCracken, and 
Robert A. Lovett. 

'Mr. Scanlon said: "Doubtless the Com- 
mission will hear other evidence as to the 
rate of return required by the Bell System - 
some with conclusions differing from those 
proposed by AT&T. It is to be hoped that 
the Commission will insist that such testi- 
mony be similarly buttressed by the testi- 
mony of witnesses of comparable investment 
competence, stature and responsibility to 
those presented by the Company." (Bell Ex. 
20, p. 68). 

long term. In short, it would be false 

As pointed out by AT&T's vice 
president and treasurer, John J. 
Scanlon (Bell Ex. 20), the plain fact is 
that an investor will not buy AT&T 
stock if he thinks he can get better 
performance in another stock, relative 
risk to his investment considered. And, 
in assessing risk, the investor does not 
view the stock of AT&T much dif- 
ferently than he does the stock of 
other large, well-established American 
businesses. Thus, if AT&T is not earn- 
ing a return on its equity in a range 
comparable to the earnings of other 
companies, the investor will choose 
some other investment opportunity. 

In order to ascertain the earnings 
level needed to maintain AT&T stock 
as a comparable investment alterna- 
tive, Mr. Scanlon analyzed the earn- 
ings on equity of 528 manufacturing 
companies. The study showed that 
equity earnings of these companies 
manifested strong central tendencies 
of about 10% to 12%. The averages 
for all companies were even higher. 
As a futher check, Mr. Scanlon made 
a similar study of the equity earnings 
of 128 electric utility companies and 
found their equity earnings to be 
reasonably comparable to non-regu- 
lated companies. Any differences in 
business risk between manufacturing 
companies, telephone companies and 
electric utilities tended to be equal- 
ized by differences in capital structure 
between the respective industries, so 
that the investment risk of the equity 
owner in each case was quite com- 
parable. Finally, in order to allow for 
possible residual differences of equity 
risk, Mr, Scanlon said that Bell should 
be allowed to earn between 10% and 
11% on its equity — the lower end of 
the central range of manufacturing 

To demonstrate the practical signifi- 

cance of the comparable earnings 
standard. Bell introduced five prom- 
inent spokesmen representing all 
sectors of the financial community 
who described the manner in which 
AT&T stock is actually evaluated as 
an investment opportunity.^ All of 
their analyses supported the same re- 
sult-that AT&T needs a return of 10% 
to 11% on book equity to be competi- 
tive with other investments. This evi- 
dence was never challenged. This level 
of earnings for equity translates to an 
over-all fair rate of return of at least 

Finally, our need for earnings of at 
least 8% was examined from the point 
of view of national economic and de- 
fense objectives and desirable regula- 
tory goals. This testimony was pre- 
sented by men of such stature and 
reputation that all have been valued 
advisers to Presidents of the United 
States.' They gave unqualified sup- 
port to the position that earnings of 
at least 8% for the Bell System would 
serve the national interest and be con- 
sistent with national policy. 

Despite a clear challenge to do 
so,'' no witness with practical financial 
experience came forward to oppose 
these views. In point of fact, only 
three witnesses made rate of return 
recommendations inconsistent with 
our own and none of the three had 
any investment or financial experience. 

One of the opposition witnesses 
(Robertson, W. Va. Ex. 1) derived a 
cost of capital of 7% by using raw 
earnings-price ratios, a method 
thoroughly repudiated by the other 
witnesses, by numerous commissions, 
and by NARUC. Dr. Robertson ad- 
mitted that his cost of capital, so 
derived, could not be applied to the 
book value of AT&T stock (Tr. 5072). 
Hence it is useless in this case. 

Another opposition witness 
(Thatcher, FCC Staff Ex. 16) recom- 


mended a return of about 7%. But he 
conceded many errors, some minor 
but some major. He made no allow- 
ance for flotation costs but admitted 
the he should have done so. He did 
not give effect to rights offerings and 
vacillated on whether he should 
have/ although the other staff wit- 
ness, Dr. Gordon, was clear that the 
value of rights must be considered in 
finding cost of capital. Clearly, Dr. 
Thatcher's testimony lacks credibility, 
and if his figures are adjusted for his 
errors, his rate of return would be at 
least 8%. 

The third opposition witness (Gor- 
don, FCC Staff Ex. 17, p. 23) stated 
flatly that, if the Commission accepts 
the existing capital structure and rate 
of new investment, then the Commis- 
sion should allow AT&T a rate of re- 
turn of 8.25%. He then argued that 
the Bell System's financial policies 
could be drastically altered to reduce 
its cost of capital. 

Dr. Gordon presented a complex 
mathematical model which included 
a formula designed to predict the 
price of AT&T stock under various 
assumed investment, financing and 
earnings rates. His formula does not 
of itself produce a cost of capital; it 
merely produces a market price. Using 
this formula, he calculates what the 
market price would be at different 
rates of return and different rates of 
growth. He then selects as the cost of 
capital the lowest rate of return which 
would, granting his assumptions, pro- 
duce a maximum market price at the 
desired rate of growth. He computed 
that, at a 7% rate of return and with 
a $2 for $1 debt-equity financing 
policy, AT&T stock would reach a 
maximum price of $73.76 if manage- 
ment invested at the 8% growth rate 
he assumed to be proper. It was his 
contention that any higher or lower 
growth rate would result in a lower 

stock price. He admitted that the 
validity of his model — and his con- 
clusions — depended on whether the 
model produced a maximum price of 
the stock. His assumptions, that the 
Bell System could prudently carry its 
debt ratio to 50% and that the market 
could absorb at reasonable cost the 
volume of new debt required by his 
policy, were the products not of his 
model but of his unsupported judg- 
ments in an area where he claims no 

As it turned out, Dr. Gordon's model 
did not produce a maximum price of 
the stock. Accordingly, by his own 
admission it cannot be used to deter- 
mine the cost of capital.' 

On February 1, two weeks before 
the record was closed in this phase of 
the case. Dr. Gordon came in with a 
new model, based on new and ques- 
tionable assumptions and even more 
heavily reliant on his unsupported 
judgments. His new model still had 
many infirmities, and it indicated a 
return requirement of 7.44% (Tr. 9935- 
36), which he "adjusted" to 7.25%. 

Even though one might speculate 
on whether future mathematical 
models could be helpful to rate of re- 
turn determination, at this time and on 
this record Dr. Gordon's approach — 
with the collapse of his first model and 
the numerous deficiencies in his 
second — can hardly be regarded as a 
serious substitute for the expert testi- 
mony of the witnesses presented by 
the Bell System. In short. Dr. Gordon's 
models simply cannot be relied upon 
in this case. 

Finally, it should be noted that Dr. 
Gordon readily conceded that if Bell's 
present financial policies are "within 
the limits of prudence of sound finan- 
cial management," AT&T should be 
allowed to earn more than 8% (FCC 
Staff, Ex. 17, p. 23; Tr. 9840). 

Thus there is no real issue on rate 

'Dr. Thatcher frankly conceded he had erred 
in failing to consider the value of stock rights 
in computing his cost of equity capital (Tr. 
4711), an error which, when adjustment is 
made, would bring his cost of equity to the 
same level as that recommended by Bell wit- 
ness Friend (Bell Ex. 18). In a later appear- 
ance, Dr. Thatcher retracted his confession 
of error (FCC Staff Ex, 30), but he could not 
explain his retraction and finally demon- 
strated his lack of understanding by asking 
Bell Counsel to explain how stock rights 
should be considered (Tr. 9603). 

'Dr. Gordon said: "If price rises indefinitely 
with the investment rate as portrayed in the 
graph on page 5503, my analysis does not 
yield a cost of capital figure for AT&T." (FCC 
Staff Ex. 17A, p. 9) Later he said: "I agree 
that the estimating technique Dr. Tukey 
(Bell's witness) proposed is more accurate 
than my simpler method, and therefore, as 
my model stands, share price does rise in- 
definitely with the investment rate for a 7% 
rate of return." (FCC Staff Ex. 35, p. 8). Thus, 
his mathematical error means that by his own 
statement his model cannot be used to find 
the cost of capital. 


'It is important to note that tliere is not be- 
fore the Commission for decision at this time 
any other question regarding accelerated de- 
preciation such as whether a portion of Bell's 
tax expense should be disallowed (a) directly 
on the assumption Bell should have taken 
accelerated depreciation, or (b) indirectly on 
the grounds that Bell's earnings should be 
assumed to be higher than they are because 
potential tax deferrals resulting from accel- 
erated depreciation should be assumed to 
"flow through" to net income. 

'One of the opposition witnesses who 
strongly urged "flow through," agreed that 
whether a company should or should not use 
accelerated depreciation is a question on 
which reasonable men could differ (Van 
Scoyoc, Tr. 9313A). 

of return; the record will not support 
a finding lower than 8%. The only 
remaining question relates to the pru- 
dence of the Bell System's financial 
policy of maintaining debt ratio in the 
307o to 40% range. 

The reasons for Bell's policies re- 
garding debt ratio were fully de- 
veloped in the record. Mr. Scanlon 
testified that the development of the 
Bell System's capital structure has 
been the result of careful and in- 
formed attention to the capital market 
month by month and year by year. 
Clearly the record demonstrates that 
Bell's financial policies were devel- 
oped over the years by an informed, 
responsible management and that 
these policies are powerfully sup- 
ported by the competent testimony of 
leaders in the financial world. 

Accelerated depreciation 

Since the issue in this phase of the 
case is limited to the relevance of 
accelerated depreciation to rate of re- 
turn,' our brief places emphasis upon 
demonstrating that no adjustment in 
Bell's allowed rate of return is war- 
ranted by reason of Bell's non-use of 
accelerated depreciation. 

The Bell System's decision not to 
use accelerated depreciation was 
reached after careful consideration by 
Bell's officers and directors (see Stott, 
Bell Ex. 38 and Jones, Bell Ex. 37), who 
consider it prudent for the Bell Sys- 
tem companies to use straight-line 
depreciation for tax purposes, as they 
must for book purposes. In practical 
effect, the only choice Respondents 
have is between straight-line tax de- 
preciation and accelerated tax depre- 
ciation with "flow through" of the 
reductions in tax payments. The posi- 
tion of the opposition witnesses is 
based on setting rates as if Bell had 
adopted accelerated tax depreciation 

with "flow through." 

"Flow through" is a step back 
toward the concept of retirement ac- 
counting. It ignores a current cost just 
as retirement accounting ignored a 
current cost. Years ago, it was asserted 
under retirement accounting that de- 
preciation reserves need not be ac- 
crued, because, with continued plant 
growth, retirement charges would 
never exceed accruals and the large 
reserves created by accruing full de- 
preciation would be unnecessary. This 
concept is now universally discred- 
ited, and it should not be permitted 
to make its partial reappearance under 
the form of tax "flow through." 

As Mr. A. L. Stott, AT&T vice presi- 
dent and comptroller, pointed out, 
depreciation deductions for tax pur- 
poses arise out of the investment of 
capital by investors. The theory of the 
opposition witnesses would involve 
eroding the value of the investment 
by prematurely taking tax deductions 
attaching to the property without rec- 
ognition of the cost involved. 

Even if we were to assume that this 
Commission might have a different 
viewpoint about accelerated deprecia- 
tion, it would be impossible on this 
record to find that the Bell System's 
non-use of accelerated depreciation 
is the result of Bell management's 

In support of our position that no 
adjustment in Bell's allowed rate of 
return is warranted by reason of Bell's 
non-use of accelerated depreciation, 
we show that the use of accelerated 
depreciation could not provide a 
source of interest-free capital, thereby 
reducing the amount of capital which 
Bell must raise in the future, because, 
for very practical reasons, Bell could 
not "normalize" the tax deferrals re- 
sulting from accelerated depreciation. 
Without "normalization," there 
would be no fund or reserve available 


for investment in telephone plant. 

Hence, the fact that tax deferrals 
resulting from accelerated deprecia- 
tion with reserve accounting can pro- 
vide some businesses with funds 
which can be used to promote 
national economic growth can not in 
any way affect Bell's required rate of 

No witness in this case has said that 
Bell's rate of return should be adjusted 
because of Bell's non-use of acceler- 
ated depreciation. And, of course, no 
witness has said how much any such 
adjustment should be. 

The Commission staff urged that 
the issue of accelerated depreciation 
be included in Phase 1 to the limited 
extent of its relevance to rate of re- 
turn. So it may well be that the staff 
will present, ex parte, some other 
argument on this point which has not 
occurred to Respondents. If this 
should happen, we believe due proc- 
ess requires that we be informed of 
the staff's argument and be given an 
opportunity to meet it or to rebut it. 

The rate base items 

No party to this case questions that 
Bell must have cash with which to do 
business, that it must have on hand 
material and supplies, and that to 
meet the public's requirements it must 
always have substantial amounts of 
plant under construction. And as to 
material and supplies and plant under 
construction, we can find no chal- 
lenge in the record as to the reason- 
ableness of the amounts Bell had on 
hand during 1965 or 1966. 

What then are the issues? As we 
see it, the principal questions to be 
resolved are these: 

(a) Have all the amounts claimed by 
Bell for these three rate base items 
been supplied by the investors? 

Our testimony has amply demon- 
strated that the amounts claimed in 

the rate base have all been supplied 
by investors and that all amounts not 
supplied by investors have been ex- 
cluded. Two separate studies (Went- 
worth. Bell Ex. 3 and Mason, Bell Ex. 
33) supported this testimony. The 
validity of these analyses was not seri- 
ously challenged in this record. 

(b) Is the amount of cash held by 
Bell and claimed in the rate base 

Succinctly, Bell's policy is this: For 
prudent management, enough cash 
should be held on hand' so that the 
total of Bell's current assets (consist- 
ing mainly of cash, material and sup- 
plies, and accounts receivable) should 
be at least equal to its current liabili- 
ties. The reasonableness of this one to 
one ratio was supported by evidence 
showing the practices in other busi- 
nesses (O'Connor, Bell Ex. 32), most 
of which maintain ratios substantially 
higher than one to one. 

The reasonableness of Bell's posi- 
tion was further supported by a 
thorough explanation of the impor- 
tance of maintaining at all times ade- 
quate liquid assets to cover fully Bell's 
tax liabilities. The legal hazards of pur- 
suing any different course were 
spelled out in an opinion of the Davis 
Polk law firm of New York (Bell Ex. 43, 
Att. A). 

(c) Should plant under construction 
he disallowed because either (1) the 
plant is not yet revenue producing, or 
(2) the investors are not entided to a 
full rate of return of 8°/o inasmuch as 
Bell capitalizes interest during con- 
struction at 5°/o? 

The allowance of the amount 
claimed for plant under construction 
is required in fairness and equity. In- 
vestors have put up the money. It is 
being used prudently to build new 
plant for expansion and moderniza- 
tion. And investors don't accept a 
lower return while plant is being built. 

'Actually, most of the cash is placed In tem- 
porary short-term investments until needed 
in the business, and the interest received is 
credited to revenues, thereby reducing the 
revenue requirements to be obtained from 
customers. Central investment of these funds 
results in the best economies and efficien- 


"In response to a question about future 
risks from Commissioner Cox, Robert A. 
Lovett, noted banker and former Secretary 
of Defense, said: "I am not saying, sir, that 
if is my view that the future is dark. 1 am 
only saying in a company that is so fully 
charged with the national interest and with 
national security, the rule there should be 
to hope for the best while you prepare for 
the worst. That is my position. I think you 
have to be more prudent in this than in 
almost any other business." (Tr. 7952). 

"In its report following the long investiga- 
tion of the late 1930's, this Commission com- 
mented favorably on the Bell System's con- 
servative debt ratio in contrast to certain 
other public utility systems having a much 
higher ratio of fixed mcome securities. (Re- 
port of Telephone Investigation, H.R. Doc. 
No. 340, 76th Cong., 1st Sess., 449-50, 593 

To disallow plant under construction 
is the equivalent of saying to the in- 
vestor "we will not in fact allow you 
the full rate of return we have other- 
wise found reasonable." In short, the 
financial facts of life require that in- 
vestors be paid a full return on their 
investment regardless of whether reg- 
ulatory authorities exclude a portion 
of that investment. 

The suggestion that the investor is 
entitled to no more than the interest 
capitalized during construction is 
superficial. This Commission has 
allowed Western Union a full return 
on plant under construction where no 
interest was charged during construc- 
tion. (34 F.C.C. 217, 285-286). If in- 
vestors in Western Union are entitled 
to a full return on plant under con- 
struction, then investors in AT&T are 
likewise entitled to a full return. 

Since the 5 percent interest charged 
construction is credited to income, the 
effect of Bell's request is that it be 
allowed to earn the difference be- 
tween 5 percent interest charged con- 
struction and a full 8 percent return 
on the amount of investors' money 
devoted to construction. Fairness sup- 
ports the request. 

Financial risk and management 

It will be noted with respect to three 
of the major issues — rate of return, 
accelerated depreciation, and the rate 
base items — that a recurrent theme 
in the differences between Bell's wit- 
nesses and the opposition witnesses 
pertains to the degree of financial risk 
which the Bell System should assume. 
As we see it the opposition witnesses 
are saying this: 

(a) Bell should go further into debt; 
your policy of 30% to 40% is too 
conservative; you should go to a 50% 
debt ratio, or even higher, and if you 
did, somehow or other you could get 

along with a lower rate of return. 

(b) Bell should take accelerated de- 
preciation and "flow through" the tax 
deferrals to net income; the deferred 
tax liability probably will never have 
to be paid because future tax deferrals 
will be there to offset the liabilities; so 
again you are too conservative. 

(c) Bell is too conservative in keep- 
ing more cash on hand than it needs; 
if you kept less cash, your rate base 
would be less. 

This central theme, which runs 
through the opposition approach in 
this case, adds up to an advocacy of 
financial brinkmanship not in keeping 
with the longer term basic goals of 
both this Commission and the Bell 
System: to assure the nation an ade- 
quate and ever improving communi- 
cations system. Neither the Commis- 
sion nor management should counte- 
nance financial shortcuts which could 
in the long run frustrate these goals. 

No one can know with certainty 
today whether Bell's future ability to 
serve would in fact be impaired by 
assuming the greater risks recom- 
mended by the opposition. So the 
question of how much financial risk 
should be assumed today obviously 
becomes a matter of judgment. But 
whose judgment? 

Clearly, management must make 
the first judgment. The Commission 
has a right and duty to review that 
judgment. But the Commission should 
not and legally it cannot substitute its 
judgment for that of management un- 
less the record shows that manage- 
ment has abused its discretion or has 
been imprudent. On this record such 
a finding could not be made. 

Even if this Commission felt strongly 
that Bell should assume greater risks, 
it should be hesitant to force such 
risks on management. (See testimony 
of Lovett, Bell Ex. 44.)'° Regulatory his- 
tory is full of examples of utilities 


which have tailed because they as- 
sumed too much financial risk. Legis- 
lative bodies have granted commis- 
sions wide powers to prevent utilities 
from incurring financial risks that 
might jeopardize their ability to serve. 
It would be ironic for regulatory au- 
thority over rates to be used to force 
upon a utility management the 
assumption of greater risks than the 
management thought wise." 


A separate brief submitted herewith 
by Respondents fully discusses this 
complex and technical issue. In sum- 
mary, there are before the Commis- 
sion three principal recommenda- 
tions: those of Bell, of NARUC, and of 
USITA. The recommendations relate 
to two classes of plant: Interexchange 
circuit plant and subscriber plant (sub- 
scriber lines and station equipment). 

With respect to interexchange cir- 
cuit plant. Bell recommends discon- 
tinuance of the so-called Modified 
Phoenix Plan, first adopted in 1956. 
NARUC, although with dissenting 
members, favors retention of the plan. 
Elimination of Modified Phoenix, to- 
gether with elimination of certain 
other averaging techniques, would 
transfer from interstate to intrastate 
about $176,000,000 of revenue re- 
quirements. In other words, if this 
were the only change. Bell's interstate 
return would be increased. 

Modified Phoenix involves a proc- 
ess of averaging the investment and 
related expenses of Long Lines inter- 
exchange circuits with those of the 
associated Bell companies. Since Long 
Lines circuits are of greater average 
length, and since longer circuits gen- 
erally have a lower investment per 
mile than shorter circuits, lower unit 
costs are assigned to Associated Com- 
pany circuits than in fact apply. Thus, 
Modified Phoenix results in increasing 

the investment assigned to interstate 
circuits and decreasing the investment 
assigned to intrastate circuits. 

Since many of the circuits thus aver- 
aged could be directly assigned to 
interstate or intrastate, the averaging 
process tends to do violence to the 
principle of use, which should govern 
all separations procedures. While this 
weakness has always been inherent to 
a degree in the Modified Phoenix 
Plan, the problem has grown worse in 
recent years because of technological 
developments and rapid growth. We 
believe that long term soundness of 
the separations procedures calls for 
elimination of Modified Phoenix. 

With respect to subscriber plant, the 
present separations procedures rec- 
ognize that the worth — or value — 
of its use for long distance interstate 
calls is greater than the worth of its 
use for short haul intrastate toll or 
local calls and that, accordingly, in 
determining how much of the sub- 
scriber plant should be assigned to 
interstate, the greater value of this 
interstate use should be recognized. 
The new plan proposed by Bell and 
supported by NARUC would provide 
a more accurate, and we believe more 
reasonable, measure of that worth 

The effect of Bell's subscriber plant 
proposal would be to transfer from 
intrastate to interstate about $282,- 
000,000 of revenue requirements. 
Considered together with elimination 
of Modified Phoenix, the effect of the 
total Bell proposal would be to trans- 
fer from intrastate to interstate a net 
amount of about $106,000,000 in rev- 
enue requirements. This would de- 
crease interstate rate of return by 
about 0.65 percent. 

We believe NARUC's proposal to 
change only the subscriber plant 
methods is not only unsound in that 
it fails to eliminate Modified Phoenix, 

but is clearly impractical under pres- 
ent circumstances. NARUC's proposal 
would transfer from intrastate to inter- 
state about $282,000,000 of annual 
revenue requirements. This would 
necessitate a substantial increase in 
Bell's interstate rates. 

USITA's proposals would require an 
even greater increase in interstate 
rates because they would transfer from 
intrastate to interstate about $525,- 
000,000 of revenue requirements. 
Western Union's proposals would 
transfer nearly $500,000,000 of rev- 
enue requirements. 

Under either the Bell or the USITA 
exchange plan the independent tele- 
phone companies would receive addi- 
tional amounts in settlements with the 
Bell companies (assuming settlements 
with the independents follow the 
separations procedures). Under Bell's 
plan about $30,000,000 would go to 
the independent companies leaving 
$76,000,000 which would be sub- 
tracted from Bell's intrastate revenue 
requirements. Under the USITA ex- 
change plan, however, about $71,- 
000,000 would go to the independent 

We believe that the Bell System's 
plan is sounder in principle than any 
of the other proposals. We recom- 
mend that it be accepted and applied 
uniformly in all jurisdictions. 


It should be noted, as our brief 
points out, that for the year 1966, our 
return on net investment for interstate 
service was 8.19 percent, as recorded, 
and 8.01 percent, as adjusted for 
known changes. These results are 
within the reasonable range of earn- 
ings supported by the evidence. 

This letter has of necessity dealt 
only with the high points of our case. 
We urge a full and careful reading of 
our briefs and proposed findings. D 




Behind every TV tube is an army of actors, 
directors, writers, sponsors, athletes, 
cameramen, and technicians practicing 
disciplines ranging from hairstyling 
to acoustical engineering. The efforts of 
these specialists produce the pictures 
that the TV cameras capture. Moving this 
output of images all over America is, 
however, the job of an almost equally large 
and diverse crew: The men who 
plan and man the Bell System's 
nationwide transmission network. 

Behind men who manage TV transmiaion system is map of nationwide network 
that can be custom-tailored to each broadcaster's minute-by-minute requirement. 
At New York switching center (right) technicians monitor picture quality. Similar 
centers hum in Atlanta, Chicago, Los Angeles. 






"Go out in the street and ask ten people what it takes 
to put one of those pictures on their TV tube. They 
think you point the camera and, bang, they get the 
picture. Nobody realizes what it takes to keep that 
flow of pictures coming in. Of course, if we do our 
job right, maybe we should be the invisible men." 

Dick Kerr pauses. He's a wiry Missourian who was 
operations manager of an independent telephone 
company before he was old enough to vote. Later 
he ran a Signal Corps station in the Army. Now he 
heads a team of salesmen handling fast-breaking de- 
mands for TV transmission facilities. His bailiwick 
includes specialized TV networks and miscellaneous 
closed-circuit and educational television transmis- 
sion requests that come into the New York office of 
AT&T's Long Lines Department. Also in this office are 
the men who handle requests for transmission from 
NBC, CBS and ABC — plus the vital 'facilities' organi- 
zation that keeps an up-to-the-minute inventory of 
all TV transmission channels and designs networks to 
customers' specifications. 

"How about the State of the Union message in 
January?" asks Dick Vitzthum, an account manager 
on Dick Kerr's staff who was handling the National 
Educational Television account. "I was sitting at 
home on Saturday afternoon when I heard that the 
President would give the talk on Tuesday. 1 told my 
wife, 'Sweetheart, I'll see you when it's over,' and 
headed for the office. Saturday afternoon we got the 
plant and engineering men together. Sunday we 
made the plan. Monday, the facilities people scoured 
the country for available circuits, which wasn't easy 
because everybody and his uncle wanted to transmit 
that event. We handled NETV's requirement to broad- 
cast the program to 70 stations. Then, we tied in 10 
live locations all over the U. S. after the speech so 
experts, such as Arthur Schlesinger and Walter Heller, 
could analyze the President's message. We bounced 
from one speaker to another, back and forth. 

"But it worked. The Times complimented us when 
it reviewed the show." Vitzthum shows a clipping 

from Jack Gould's column in The New York Times of 
January 11 : " '. . . President Johnson's . . . was the first 
State of the Union message to be carried live on four 
national television networks. . . . The switching of the 
program from city to city ran off faultlessly, a testa- 
ment to the technical efficiency of the American Tele- 
phone and Telegraph Company . . .' " 

Bill Cook, who handles NBC for Long Lines, breaks 
in, "The way Vitzthum here has been showing that 
dog-eared clipping around, you'd think he just got a 
rave review for a great perfomance in Hamlet." 

Behind the picture: planning, purpose 

The Long Lines network managers, and most of the 
other people associated with TV transmission, live in 
a climate of crisis. In return for being at the mercy of 
events, they have the satisfaction of being part of 
those events. Whether it's a tragedy at Cape Kennedy 
or a Pope's visit to New York City, they must find a 
way to get the picture from its point of origin to tele- 
vision stations across the country. Putting the Bell 
System's TV switching network to real-time, on-line 
use takes the efforts of craftsmen, engineers and 
planners. While craftsmen and engineers may often 
be caught in the hectic "right-now" atmosphere, 
planners have a different perspective. 

"Here's something that may surprise you : From our 
point of view, there are no networks as such," says 
Jim Griffin, who has the job of planning future TV 
transmission facilities. 

"Physically, there's just one nationwide network: 
that of the Bell System. Imagine a map of the United 
States with an enormous spider web spun across it. 
This web is our network. Into it we can weave any 
broadcaster's geographical coverage. 

"Take a typical Sunday during the football season, 
for example. One minute CBS has circuitry taking an 
NFL game all over the country. At an appointed in- 
stant in time, we dissolve that hookup into 23 re- 
gional pieces, so local stations can show local or 
regional commercials: snow tires in Maine, swimsuits 


in southern California, budget air fares in New York. 
Sixty seconds later, we put the whole thing back 
together and the game goes on. To me, the whole 
transmission system is a kind of harpsichord on which 
we can play anybody's favorite tune." 

Leaning forward and folding his big hands before 
him on the desk, Jim says, "We've got to have the 
capacity. Who else could be expected to have 600,000 

channel miles of communications circuits: 350,000 
miles of voice and data channels; 125,000 miles of 
TV-carrying capacity; and another 125,000 miles of 
protection' channels, also TV-grade." 

Protection circuits provide reliability 

The idea of protection capacity is expanded by 
Bob Miller, who helps manage the big Long Lines 
switching center at 32 Avenue of the Americas. Here, 
and at similar locations in Atlanta, Chicago and Los 
Angeles, the actual switches are thrown that make 
and dissolve the national TV circuits. 

"The word 'protection' means what it says," Miller 
says, his voice hardening a little with recollected 
emergencies. "We need reliability in the face of 
floods, hurricanes — even rockslides on the moun- 
tains where our microwave towers sit." 

Miles McCosker, who works on Miller's staff — 
around the clock when necessary — adds, "We also 
use the protection capacity to meet big demands like 
those football Sundays, in addition to CBS, NBC tele- 
vises the whole American Football League. And either 
one of them may want to televise several games of 
regional interest, which means we create subnet- 
works and then split them into those separate com- 
mercial segments. Meanwhile, all the non-football 
stations want, deserve and get business as usual." 

Bob Miller cuts in. "Of course, there's one other 
side to protection, just to finish the story. A nation- 
wide one-minute commercial in, say, the Packers- 
Colts game costs about $70,000 a minute. Put yourself 
in the place of a TV vice president if one of our men 
in the sales group had to go to him and say we lost 
his commercial. That's another reason why, if one 
path is blocked, we've got to have another way to go, 
even if it means sending the picture from New York 
to Washington by way of Chicago. 

"The network we have — with its 'protection' 

This switch determines route TV image will take. Behind it lies 
miles of microwave circuitry, including unmanned towers that 
change picture's path at buttons' bidding. 



"Now, live, 

from Los Angeles, 

we bring you..." 

Los Angeles Open golf championship is typical of year-round 
right-now sports action expected by U. S. TV viewers. Commercial 
TV network's cameras record event, pipe pictures to its truck. 
Then telephone company mobile unit beams it to nearest switch- 
ing center, thence to local stations around country. 


capacity — makes it possible for us do just about any- 
thing a broadcaster wants. We can take an alternate 
route when there's trouble, meet suddenly quin- 
tupled demands, and always go by the most eco- 
nomical path under the given circumstances. This is 
the base that is built on when Jim Griffin and his 
people plan future growth — both for the interstate 
hookups that we handle at Long Lines, and the local 
facilities built and maintained by the Bell System 
operating companies." 

Local phone companies essential 

Local Bell System companies generally pick up 
the picture at the scene of the action and transmit it 
to the Long Lines Department for national distribu- 
tion. The New York Telephone Company, for exam- 
ple, lined the Pope's route from John F. Kennedy Air- 
port to Manhattan with portable microwave towers 
to keep the Pontiff in constant view. "Once in the 
city," Dick Vitzthum recalls, "The New York Tel 
people put the pictures into the coaxial cables they 
maintain all over the city. They cover the big hotels, 
the United Nations — everywhere the action is likely 
to be. Of course, this means keeping all the channels 
tested and ready, even when there is no action." 

On the average, the Long Lines office in New York 
handles 300 orders a day and, when President Ken- 
nedy was assassinated, a record 1200 were handled. 
Pooling their reminiscences, the Long Lines account 
managers agree that a week in September, 1966 was 
typical of the way orders for service sometimes pile 
up even under "normal" circumstances. All the 
national TV networks were doing business as usual. 
And then there were a few specials: A space shot 
from Cape Kennedy; a closed-circuit show from 
Detroit that permitted Chrysler's Dodge division to 
unveil a new line of trucks to dealers in a few dozen 
cities; a New York State network for two political 
conventions; educational hookups in a number of 
towns; a special closed-circuit system for Republican 
fund-raising dinners; and on Saturday night, Miss 


America "live" from Atlantic City competing with a 
special pro football game. 

"The trend is obvious," Dick Kerr concludes. "Be- 
sides all the network shows originating in studios and 
on film, which will continue, the big growth areas 
are closed-circuit TV, educational TV, and more and 
direct telecasts from remote locations." 

From systems, social implications 

A man who agrees with these estimates is Dick 
James, engineering manager— video, at AT&T's head- 
quarters. On the subject of remote TV pickups, James 
notes that it's expensive to engineer a system that can 
transmit a picture from anywhere at any time. "Take 
the Pope's visit. To engineer a system that could han- 
dle that peculiar demand, you'd be committing facili- 
ties to an event that has occurred once in 1,967 years. 

"Of course, we handle part of this demand with 
temporary and mobile facilities. But there's a constant 
demand for more of these. Probably nobody but the 
Bell System could be expected — or could afford — 
to maintain an instant capability to meet almost any 
unforeseen demand for transmission facilities. We 
accept that obligation and it is expected of us. The 
costs of this, though, are enormous. 

"We have to have coaxial cable all over New York 
City — just to be ready for the occasional Pope's visit, 
or the visit of a head of state to the UN, or a ticker- 
tape parade, or a political rally of national interest. 

"In Washington this situation is even clearer. We 
have to maintain 'plug-in' facilities for TV transmis- 
sion all along Pennsylvania Avenue. Every four years, 
at inauguration time, the demand for facilities peaks. 
Except for an occasional parade or other public event, 
this 'buried plant' doesn't get much use. 

"This 'standby capacity' — including all the cables 
and mobile units and so on — means that a substantial 
part of the plant is used only sporadically by the 
broadcasters. This is one reason we are constantly 
looking for opportunities to use our plant in other 
branches of the television industry." 


Leaning back in his chair, James folds his hands 
behind his head and swivels toward a window that 
overlooks downtown Manhattan. After a pause, he 
outlines the broader perspective: "There are really 
four television businesses we're involved in, and as 
you go down the list the social, political, technical 
and personal implications grow greater. 

"First there is network television, which is a one- 
way street — one link between an event and the sta- 
tion. Very precise engineering required, but the 
words and pictures all go in one direction . . . 

"Then there's CATV, community antenna tele- 
vision. As a common carrier, we lease lines to the 
CATV people to transmit pictures from their receiving 
stations into the homes of their subscribers, or they 
use our poles for their own lines. This demand could 
really grow — when and if the legal disputes among 
CATV people, broadcasters and regulatory commis- 
sions are settled. We have to be ready with plans and 
equipment. Meantime, it's a very fluid situation. 

"Next there's CCTV, closed-circuit television. This 
is the third TV business where we provide service. 
It's growing fast, both in number of installations and 
in the size of them. Xerox, for instance, just recently 
asked us to set up a New York-to-Los Angeles trans- 
mission link for an exclusive corporate press con- 
ference in the two cities. IBM has also been a leader 
in this area and we ourselves are using television to 
an increasing extent for conferences, instruction, etc. 

"Examples of closed-circuit TV could be multi- 
plied, and the list of companies using these facilities 

Beginning at remote p/cfeup point. Bell technicians monitor 
signals. New device (above) shows each switching center quality 
of signal received, pinpoints trouble fast. 

gets longer every day. Each of their 'networks' is small 
compared to CBS, NBC or ABC, but there are hun- 
dreds of them — hundreds of additional networks 
stitched into our system, each one subject to change. 
Take out this meeting room in Atlanta. Add such- 
and-such hotel ballroom in Denver for next Tuesday's 
new product introduction.' 

ETV: biggest growth potential 

"This is a growth business, an enormous one, but 
even this is overshadowed by number four: educa- 
tional television. Here's where the technical require- 
ments and the social implications are greatest. 

"To take the technical side first, the problems are 
twofold. First, there's picture quality. If a group of 
medical students in Boston is watching a cornea 
transplant in Dallas, they have to see details far be- 
yond those required by laymen. And, in many cases, 
ETV requires a two-way street. Students may want to 
question the teacher, which means additional circuit 
capacity to provide this playback from the audience. 
Again, though, the technical problems are being mas- 
tered. There may be some new educational tools 
developed — but the promise of ETV goes well be- 
yond mechanical marvels. The big hope is social, 
personal, human. 

"The solutions proposed for our most pressing 
social problems are quite varied depending on whom 
you talk to. Most people agree, however, that good 
education for all is one of the things that must be 
accomplished somehow if we are to make any prog- 
ress in this area. ETV seems to be one of the educa- 
tional tools that may be useful here." 

Turning back to his papers, James flips some pages 
at random. "That's what all these charts and theories 
on how to get more 'broadband capacity' come down 
to. ETV can put more teachers, better teachers, new 
and better teaching techniques, in front of more kids, 
more often, and at less cost. Our TV network gives us 
the base to build on toward these goals. When the 
educators are ready, we'll be ready." D 


America "live" from Atlantic City competing with a 
special pro football game. 

"The trend is obvious," Dick Kerr concludes. "Be- 
sides all the network shows originating in studios and 
on film, which will continue, the big growth areas 
are closed-circuit TV, educational TV, and more and 
direct telecasts from remote locations." 

From systems, social implications 

A man who agrees with these estimates is Dick 
James, engineering manager— video, at AT&T's head- 
quarters. On the subject of remote TV pickups, James 
notes that it's expensive to engineer a system that can 
transmit a picture from anywhere at any time. "Take 
the Pope's visit. To engineer a system that could han- 
dle that peculiar demand, you'd be committing facili- 
ties to an event that has occurred once in 1,967 years. 

"Of course, we handle part of this demand with 
temporary and mobile facilities. But there's a constant 
demand for more of these. Probably nobody but the 
Bell System could be expected — or could afford — 
to maintain an instant capability to meet almost any 
unforeseen demand for transmission facilities. We 
accept that obligation and it is expected of us. The 
costs of this, though, are enormous. 

"We have to have coaxial cable all over New York 
City — just to be ready for the occasional Pope's visit, 
or the visit of a head of state to the UN, or a ticker- 
tape parade, or a political rally of national interest. 

"In Washington this situation is even clearer. We 
have to maintain 'plug-in' facilities for TV transmis- 
sion all along Pennsylvania Avenue. Every four years, 
at inauguration time, the demand for facilities peaks. 
Except for an occasional parade or other public event, 
this 'buried plant' doesn't get much use. 

"This 'standby capacity' — including all the cables 
and mobile units and so on — means that a substantial 
part of the plant is used only sporadically by the 
broadcasters. This is one reason we are constantly 
looking for opportunities to use our plant in other 
branches of the television industry." 


Leaning back in his chair, James folds his hands 
behind his head and swivels toward a window that 
overlooks downtown Manhattan. After a pause, he 
outlines the broader perspective: "There are really 
four television businesses we're involved in, and as 
you go down the list the social, political, technical 
and personal implications grow greater. 

"First there is network television, which is a one- 
way street — one link between an event and the sta- 
tion. Very precise engineering required, but the 
words and pictures all go in one direction . . . 

"Then there's CATV, community antenna tele- 
vision. As a common carrier, we lease lines to the 
CATV people to transmit pictures from their receiving 
stations into the homes of their subscribers, or they 
use our poles for their own lines. This demand could 
really grow — when and if the legal disputes among 
CATV people, broadcasters and regulatory commis- 
sions are settled. We have to be ready with plans and 
equipment. Meantime, it's a very fluid situation. 

"Next there's CCTV, closed-circuit television. This 
is the third TV business where we provide service. 
It's growing fast, both in number of installations and 
in the size of them. Xerox, for instance, just recently 
asked us to set up a New York-to-Los Angeles trans- 
mission link for an exclusive corporate press con- 
ference in the two cities. IBM has also been a leader 
in this area and we ourselves are using television to 
an increasing extent for conferences, instruction, etc. 

"Examples of closed-circuit TV could be multi- 
plied, and the list of companies using these facilities 

Beginning at remote pickup point, Bell technicians monitor 
signals. New device (above) shows each switching center quality 
of signal received, pinpoints trouble fast. 

gets longer every day. Each of their 'networks' is small 
compared to CBS, NBC or ABC, but there are hun- 
dreds of them — hundreds of additional networks 
stitched into our system, each one subject to change. 
'Take out this meeting room in Atlanta. Add such- 
and-such hotel ballroom in Denver for next Tuesday's 
new product introduction.' 

ETV: biggest growth potential 

"This is a growth business, an enormous one, but 
even this is overshadowed by number four: educa- 
tional television. Here's where the technical require- 
ments and the social implications are greatest. 

"To take the technical side first, the problems are 
twofold. First, there's picture quality. If a group of 
medical students in Boston is watching a cornea 
transplant in Dallas, they have to see details far be- 
yond those required by laymen. And, in many cases, 
ETV requires a two-way street. Students may want to 
question the teacher, which means additional circuit 
capacity to provide this playback from the audience. 
Again, though, the technical problems are being mas- 
tered. There may be some new educational tools 
developed — but the promise of ETV goes well be- 
yond mechanical marvels. The big hope is social, 
personal, human. 

"The solutions proposed for our most pressing 
social problems are quite varied depending on whom 
you talk to. Most people agree, however, that good 
education for all is one of the things that must be 
accomplished somehow if we are to make any prog- 
ress in this area. ETV seems to be one of the educa- 
tional tools that may be useful here." 

Turning back to his papers, James flips some pages 
at random. "That's what all these charts and theories 
on how to get more 'broadband capacity' come down 
to. ETV can put more teachers, better teachers, new 
and better teaching techniques, in front of more kids, 
more often, and at less cost. Our TV network gives us 
the base to build on toward these goals. When the 
educators are ready, we'll be ready." D 


Way-Out Ways to Communicate 

by Dr. John R. Pierce 

As a longtime reader of science fic- 
tion, I've compared today's world 
with the predictions writers in the 
past have made about it. Somehow, 
prophecies and reality don't jibe. 

What went wrong when past 
prophets tried to take science and 
technology into account in picturing 
the future? 

In looking into the future, Aldous 
Huxley, for example, saw man over- 
whelmed by machines and by a so- 
cial structure which seems to point 
clearly to a civilization of more com- 
pact and crowded cities, and to a 
domination of every aspect of man's 
life by technology. 

But, looking at contemporary 
American life, we find that science, 
technology, and man himself have 
played a nasty trick on such prophe- 
cies. We can see that sprawling sub- 
urbia and a wandering population are 
chief characteristics of the nonstag- 
nant part of our society. 

What prophets of Utopias and anti- 
utopias lacked, partly, was a fore- 
knowledge of unpredictable inven- 
tions. For example, the transistor and 
the vacuum tube have both had a 
profound effect on our civilization, 
as well as the laser, the maser, plastics. 

Dr. Pierce is executive director ol research at 
Bell Telephone Laboratories and author oi 
eight books and scores ol scientilic articles. 

antibiotics, and a host of other unan- 
ticipated, and unanticipatable, dis- 
coveries and inventions which, at 
their inception, seemed mere toys of 
civilization. Consider the telephone, 
automobile, airplane and radio and 
television, all of which at first showed 
little promise of revolutionary impact. 
In H. G. Wells' 1899 story, "When 
the Sleeper Wakes," the city grew 
dense and glass-enclosed, and the life 
of the average man was reduced to a 
drudgery of machine-tending and a 
cubbyhole off-the-job existence. The 
individual was helpless. Yet today we 
live in a world in which one individ- 
ual created, in information theory, a 
field of study which permeates both 
sides of the Iron Curtain. Three other 
individuals, in inventing the transis- 
tor, laid the basis for a new industry 
in Japan and Hong Kong, as well as 
in the United States. 

No anthill-dwellers we 

Today we see something entirely 
different from the domed and collec- 
tivized anthills that Wells predicted 
in the Nineties. Science and technol- 
ogy may have equipped men with 
means for controlling and binding 
other men; but — and it's a big but — 
they have also provided a refuge in 
this world for the individual. 

Three great freeing influences have 
been the automobile, the telephone 

and electric power. When I was 
young, one could go conveniently as 
far as the streetcar ran. One vaca- 
tioned as far from a railway station as 
public transportation took him. 

Today, everything is different. The 
individual who wants to can escape 
into the countryside and live there 
very comfortably with the aid of an 
electric pump, bottled gas, oil heat 
and a septic tank. He can, if he de- 
sires, do a great deal of his shopping 
and socializing by phone. 

For the rest, supermarkets and 
other stores have followed the drift 
of population away from the cities. 
And industry itself has had to solve 
traffic and labor problems via moves 
out of town. 

And yet, people so spread out need 
not live in an isolated provincialism. 
However far they escape from former 
centers of population, television pro- 
grams, political broadcasts, and press 
service dispatches follow them. The 
collectivizing influences of technol- 
ogy spread by wire and wireless over 
the whole country. 

One might miss in this sprawl of 
civilization the play, the orchestra, the 
enlightened individual. But human 
contact is in part taken care of by the 
telephone and automobile, for one 
no longer boggles at the idea of call- 
ing friends or relatives across a state 
or across a continent, or at driving 50 


miles to see a friend. Indeed, human 
relationships are easier than ever be- 
tween people with common inter- 
ests, however far apart they may live, 
rather than the old confinement to the 
immediate neighborhood. 

But what of other intellectual and 
physical aspects of life? 

Unlike the newspaper, and more 
than the journal, the book is the me- 
dium of expression of the talented 
individual. In a drugstore in a small 
city near where I live, I can find a 
better variety in paperbacks than was 
available among the books of the Car- 
negie Library in a town of similar size 
in which I lived years ago. A million 
paperbacks are sold in America every 
day through 95,000 mass outlets. 

The variety which has come into 
music through long-playing records 
is even greater. The average man can 
and does purchase, for a reasonable 
price, fine recordings of more differ- 
ent compositions than either the 
Emperor or Prince Esterhazy had ac- 
cess to in Haydn's day. Or, he can 
hear these recordings played over a 
number of FM stations. 

All of the technological means of 
collectivizing people which were fore- 
seen at the beginning of the century 
have increased in strength. In their 
political and nationalistic manifesta- 
tions, these means have brought men 
closer together within nations, and yet 
nations have been driven somewhat 
further apart through national rivalry. 

This is the present as I see it. What 
of the future? 

Prophets grow warier 

I think we will have more of the 
same. But here I run a great risk, for 
that is what H. C. Wells said in the 

Nineties. And that is how he erred. 

I, too, may be overlooking very im- 
portant and revolutionary things not 
yet discovered or invented— a risk un- 
avoidable in prophecy. Ignoring the 
unknown, however, let's consider the 
foreseeable advances in the art of 

The importance of relatively 
cheaper communication need not be 
labored. Reduced rates have led to 
worthwhile personal conversations 
with distant children and relatives, 
and have greatly increased the amount 
of such communication. This lowered 
cost makes it more practical as well 
as more convenient to communicate 
rather than to travel, and this may 
save endless wear and tear on the man 
of the future. But it is not merely 
cheapening which will expand the 
role communication plays in our lives. 

The linking of voice and data is 
bound to become more common. 
Today, in business conversations, we 
frequently write down information. 
Sometimes we dictate such material 
over a telephone. This is a primitive, 
fallible and exasperating resort. In the 
future, I am sure it will be common 
to intersperse typewritten material 
with spoken remarks, all carried over 
the same circuit. And this can extend 
into the home, in making reservations, 
in purchasing advertised goods, in the 
control of household devices, and in 
many other ways. 

Finally, as communication becomes 
less specialized it will come to include 
computers as well as human beings. 

Wrong-minded early prophets 
tended to think of the computer as 
being like a man, only more so. So we 
might once have thought of an auto- 
mobile as an imitation of a horse, an 

airplane as an imitation of a bird. A 
horse is wonderful, and an automobile 
is wonderful, but they are wonderful 
in different ways. The horse excels in 
flexibility, self-sufficiency and intel- 
ligence; the automobile could not 
exist profitably without our elaborate 
system of highways. However, the 
automobile is wonderful in speed and 

While a computer has played a 
good game of checkers, it has not 
played a good game of chess, nor has 
it proven theorems in competition 
with trained mathematicians. The 
computer has not excelled at old 
tasks. It has opened up the possibility 
of new tasks, and it has done new and 
surprising things that are very perti- 
nent to the future. 

Some of these things are keeping 
account, in one primitive and limited 
but accurate and very capacious mind, 
of the whole of some knotty problem 
which was formerly spread ineffec- 
tively among a host of human beings 
and a plethora of records. Thus, the 
computer can do a superb job in pay- 
roll, in accounting, in inventory con- 
trol, and in reservations services. 

And a computer can aid a human 
being in carrying out fatiguing chores. 
Once a group of entries has been re- 
duced to a machine-readable form, 
it is no trouble for a computer to ar- 
range them in a variety of indexes, 
such as alphabetically, or according 
to key words in the title. 

Computers to talk, sing? 

Computers have been used to 
generate articulate speech from a se- 
quence of phonetic symbols. While 
the quality is not yet good, it is sure 
to be improved. In the future, it will 


be possible to query a computer by 
means of a sequence of letters or 
numbers and receive a spoken answer 
without the crude and complicated 
expedient of tape-recorded messages. 
The computer has been pushed 
beyond this difficult process of gen- 
erating articulate speech, to the gen- 
eration of musical sounds. Here its 
versatility is without limit. In principle, 
the computer can generate any sound 
in existence. Through the computer, 
the composer will be given something 
more powerful than any orchestra 
which now exists, and more accessi- 
ble than the orchestra which was at 
Haydn's beck and call. And the com- 
puter will certainly be available to the 
architect as a means for exploring the 
visual and structural consequences of 
various designs. As an editing and re- 
producing device, the computer could 
open more opportunities for publica- 
tion to the talented writer. 

Every phone a data-maker 

Advances are bound to make com- 
puters more widely available for 
teaching in schools. But, beyond that, 
people will use computers from their 
homes— ordering, making reservations 
or seeking information. This may ex- 
tend to banking as well as to other 
business transactions, so that nothing 
need go through the mail except 
actual goods. A combination of voice 
and punching buttons will do the rest. 

With this sketch of the possible, 
of the realizable, in mind, I now ask 
whether this is a happy vision of the 
future. To me, the vision is exciting 
and desirable indeed. 

In the future, government and busi- 
ness will be larger, life will be more 
complex. This is the price we must 

pay for technological well-being. 

But complexity will no longer mean 
centralization. Electrical communica- 
tion, the computer as a recordkeeper, 
and rapid and flexible means of com- 
munication will make possible a civil- 
ization which can be highly amalga- 
mated without being centralized. 

And within this structure for those 
who have something of intellectual 
importance to offer, the options will 
be greater. The computer will take 
over "mental" routine as the machine 
has supplanted physical effort. 

For artists: new frontiers 

What will happen to the arts as 
society is increasingly interwoven and 
decentralized? I cannot believe that 
live, professional theater and opera 
can be maintained except as an input 
to television. Easier transportation 
may increase rather than diminish 
highly qualified touring artists and 
small groups, such as string quartets. 
And good art, in sight and sound, will 
become more widely available than 
before through improved recordings. 

Thus, I can see a very bright future 
consistent with technology. In that fu- 
ture, technology, both through pros- 
perity it can create and through the 
communication and travel it can 
afford, could erase those differences 
associated with region and race which 
have been little affected by exhorta- 
tion and social action. Yet the same 
technology could, in a society with- 
out provincialism, give the individual 
a greatly increased range of climate 
and geography. It could provide new 
opportunities for creation, communi- 
cation and self-expression. 

Technology could bring these bene- 
fits, but will it? D 



A Man 

His City 

Ray Garcia has known bitter days, but he is not a 
bitter man. 

He is, in fact, an upbeat man in a downbeat time, 
a believer in the midst of apathy, a quiet but strong 
voice where the voices often shout, and a lover of a 
city reviled by some and sniggered at by others. 

At the same time, he remains a realist. The sorrows 
that have visited him and his friends temper his view 
of the future. He hopes, but not too much. 

The city he loves is troubled Los Angeles, and the 
bitter days came in his part of Los Angeles — the 
poverty-haunted complex of communities and peo- 
ples, predominantly Mexican-American, known 
loosely as "East Los Angeles." 

East Los Angeles, where the average educational 
level falls just below that of next-door Watts, has 
been home to Ray for most of his 30 years. His family 
moved there from a higher rent district to the west 
when Ray was four. His parents hoped that reducing 
living costs would buy better medical care for Ray's 
older brother, ill with a respiratory disease. (Not long 
after the move, the boy died.) 

It was in East Los Angeles that Ray, in pre-teen days, 
played hard through long summer evenings with as 
many as 30 kids from the same block. It was here that 
later he roamed the streets with a juvenile gang that 
was destined to produce its share of convicts and 
dope addicts. 

It was here that he dropped out of high school at 
16, then came back for night study that brought him 
a diploma and two years of college work majoring 
in sociology. 

It was here that he met Corinne, his steady girl at 
14 and his wife at 20 and, in Ray's words, "the strong- 
est and best influence in my life." It was here that Ray 
and Corinne welcomed the births of four sons, and 
faced the death of one, a victim of leukemia at the 
age of seven months. 

It is here that Ray, now a communications con- 
sultant for the Pacific Telephone and Telegraph Com- 
pany, chooses to live with his family and, in every 
hour he can find, works to improve the quality of 
life in the community. 

Topping the list of projects in which he's been a 
leader: the founding of a new boys' club in a neigh- 
borhood where none existed before, and the distri- 
bution to places of greatest need of 5,000 books 
contributed by telephone company people. 

Modest to a fault, Ray Garcia nevertheless ex- 
presses without hesitation his ideas, based on his own 
experience, on the involvement of business and the 
individual in the problems of the city. This account 
of these ideas, plus some of the satisfactions and 
frustrations in his life, may suggest some answers and 
raise some new questions for other people as they 
wrestle with problems of urban society. . . . 


A Man 

His City 

by Ray Garcia 

as told to Robert L. Varner 

When we first put the windows in the back wall 
at the new Saiesian Boys' Club — and there are 
a lot of them; the wall is almost all glass — they all 
were broken out in a matter of days. Fortunately, one 
of the club board members owns a glass company 
and was willing to contribute new glass. 

The second time we put the windows in they lasted 
about a week. The third time they lasted a month or 
more. Finally, this time, they've been in for many 
months and although some are cracked they haven't 
been knocked out altogether. I'm confident the win- 
dows are going to stay in. The kids gradually are 
getting used to playing and living where all this glass 

Mr. Carc/a is a Pacific Telephone and Telegraph Company 
communications consultant. Mr. Varner is employee information 
supervisor with AT&T. 

lets in the sun. Gradually they're learning a new 
respect for property. 

To me, those windows say something about the 
problems of East Los Angeles or all of Los Angeles or 
any city. The problems can't be licked quickly or 
easily. The people concerned need great patience 
and perseverance and understanding. But the prob- 
lems can be licked. 

The one most significant change in East Los Angeles 
since my boyhood days here, as I see it, is the feeling 
generally that we can improve the quality of our lives. 
It's a feeling that we don't have to consider ourselves 
different from anybody else — that, if we really want 
to, we can climb over any obstacle that may be placed 
in our way. 

When 1 was very young the attitude was more pas- 
sive. The attitude was, "Well, we are Mexicans and 
most Mexicans always have lived in poverty and 


always will, so there's no point in struggling." This 
has changed. Actual living conditions in East Los 
Angeles haven't changed too much, but the attitude 
has. People are trying harder; their aspirations are 
higher; they have more hope. 

Tied in with this is the fact that the poor people 
of the area are gaining a more effective voice in some 
of the programs for community betterment. 

I don't think you can put a poor person with lim- 
ited education in a very responsible position admin- 
istering a program right off the bat. He can come in 
as an aide, however — and this is being done in many 
instances — and gradually gain the experience and 
training necessary in order to be able to take an 
administrative role. 

And, whether they work as aides or not, the people 
of the community speak up more in the planning of 
the programs. They don't dictate what goes on, but 
they have something to say about it. 

So there is hope. 

There is also despair, I know, for many individuals. 
Of the 12 fellows I knew best as I grew up, only two 
have been steadily employed the last 10 years. 

Louis, for instance, was a very handsome young 
man, an athlete, who started using dope while in 
junior high school. He is still a dope addict and I 
understand has since gotten his wife hooked also. 
One day last year when I was working with the 
library at the Variety Boys' Club, which we both at- 
tended as kids, I met Louis standing across the street 
from the club. He was trying to sneak a look at his son, 
who now attends the club, but didn't have the cour- 
age to come any closer because of his condition. 

Another friend, Victor, started using dope when 
he was about 15, and has been in and out of jail since 
that time. He married my wife's closest friend and for 
a while seemed to be doing very well. But then he 
went back to dope and the situation deteriorated, 
there was no food for their three children, and the 
family had to go on relief. Victor is in prison now, 
and by chance was arrested the last time by a police 

officer who also was a boyhood friend of ours. 

And there are others. I consider these men my 
brothers, and because of them and other experiences 
I have had, I can never entertain any lightheaded or 
falsely optimistic outlook on life. 

I have been very lucky in many ways — far more 
fortunate than many of my friends. 

I was lucky, first of all, to learn the meaning and 
the value of working very hard from my father's 
background. As a cowboy in Mexico at the age of 12, 
he rode the range caring for the cattle from sun-up to 
sun-down, while my grandfather collected my 
father's pay from the Mormon rancher. This was the 
way my father contributed to their family. 

He crossed the river to El Paso at the age of 16, 
thinking my grandfather would join him. My 
grandfather never did, although just before he died 
he traveled to Los Angeles to apologize to my father 
for having treated him as he did and to tell him he 
truly loved him as a son. In El Paso, where my father 
stayed for three years, over the western states, and 
finally in Los Angeles, he continued to work very 
hard, as a mason apprentice, a farm laborer, and at 
many other jobs. He still works hard today. 

He told me the stories of how he worked as a boy, 
not in a bragging way but because I wanted to know. 
To me the stories said that if you have a job to do, 
and you really want to do it, you can. 

I was fortunate also in that certain teachers and 
other older people took an interest in me. Mrs. 
Green, for instance, encouraged me in my art work 
in grade school days. She would put up as many as 
10 of my pictures of trees on the bulletin board at the 
same time. Some years later a really fine teacher, Mrs. 
Crane, helped arrange for me to attend night school 
when I was still in my teens, although technically it 
was for adults only. 

I was lucky, more than 10 years ago, to get a job 
with the Pacific Telephone Company, with its infinite 
variety of opportunity. It was good to start as a line- 


man, where, as had been the case for my father, I 
had to work very hard. This kind of experience adds 
extra drive for any job you may move into later. 

My two years of Army experience worked to my 
benefit also. I was able to prove to myself that I had 
the abilities I had felt were mine — the abilities to 
write, to speak, to teach, to counsel. Army public 
information and NCO academy work gave me these 

The greatest personal influence came from 
Corinne. She set a beautiful example for me. She was 
just exactly the opposite of what I thought I was as 
a teen-ager. I drank and she didn't drink. I smoked 
and she didn't smoke. I didn't study and she studied. 
I finally decided that if she was really going to be my 
steady and we were going to get married some day, 
I would have to be a better guy because she deserved 
something better. 

Before we were married she helped me see the 
quality our lives could have — she urged me to 
finish high school and go on to college — and since 
we've been married she's given me help all the way. 

I had, and still have, strong faith in God. I once 
worked in a warehouse with six other fellows, all of 
whom were taking dope. At times they did their best 
to get me to try it "just once." ! feel God helped me 
steer clear. 

Those of us who are concerned with the problems 
of the city will need to work hard; we'll need faith; 
and certainly we can use a little luck if we're to deal 
with the problems. 

In East Los Angeles, as in other cities, we face 
problems of employment, housing, and education, 
with education the greatest problem of all. 

The employment situation has improved some. At 
one time prejudice blocked employment to a degree, 
but this is not really a factor today. There is some 
unemployment, but most people here are able to get 
jobs, and many hang on to them for long periods 
of time. 

The bad feature, however, is that because of their 
lack of education, they generally are not able to 
progress to any position of responsibility. Many times 
they don't want responsibility because they feel in- 
adequate, again as a result of the educational lack. 
If you are loading boxcars, as an example, you don't 
want to be a checker who sees that the orders are 
correct because your reading isn't good enough or 
your math isn't good enough and you're, afraid of 
making errors in counting. 

This means that the average family income in East 

Los Angeles is low — on the order of the poverty 
mean, actually. 

About 85 per cent of the housing is owned by 
absentee landlords. And about the same percentage 
is old, by California standards. Many of the single 
dwellings have given way to multi-unit low-rent 
housing projects, but a great number of the small, 
individual houses remain. 

A lot of these are sub-standard, but they could be 
restored, rather than torn down. I think a slum is a 
slum by definition and partly because of the fact the 
people living in the homes often don't really know 
what they are living in. They are too close to them 
to see the beauty in the old homes. 


I especially like the gingerbread on the small Vic- 
torian homes which are all over the place. These 
homes have style and character. I would like to see 
a program under which the fundamentals of archi- 
tecture could be taught to the children in the area 
so that they would have an appreciation of the homes 
they live in and perhaps a desire to make them as 
they were when brand-new. 

Along with this could go courses in remodeling 
and restoration — the practical steps to be taken in 
rented dwellings as well as those individually owned. 


A related idea: an art class could paint these 
houses as an assignment, not as they are now 
but as they appear in the mind's eye, after restoration. 
An art show of paintings of this kind for all the 
residents of the area would give further impetus to 
restoration. A resident could be given the painting 
of his home as a reminder of what might be done. 

Race relations pose no particular problem within 
East Los Angeles. Roughly 65 per cent of the people 
here are Mexican-American, some 20 per cent are of 
oriental background, mostly Japanese, some 10 per 
cent are Negro, with the balance a mixture, mostly 
of European extraction. 

People here generally are indifferent to race or 

color. If you live here, you belong here, and you're 
accepted. The only time I notice any distinction is 
when people try to define what I am. Those outside 
East Los Angeles, particularly, don't seem to feel com- 
fortable just saying, "Ray Garcia is going to be here." 
They usually add, "By the way, he's that Mexican- 
American fellow I've been telling you about." 

Most Mexican-Americans never doubt that they are 
Americans first, even though Spanish may be spoken 
in the home and there is pride in the Mexican 

As in many other cities, the roots of most of our 
other problems in East Los Angeles reach back to the 
one big problem of education. The Mexican-Amer- 
ican population here averages between eight and 
nine years of school completed, as compared to the 
Los Angeles Negro average of 10 years, and an aver- 
age for the city as a whole of 12 years. The educa- 
tional area is one in which the telephone company, 
with its pool of brainpower, has contributed and 
must continue to contribute, as should all business. 

Sometimes people question the wisdom of busi- 
ness action in such a field. I feel, as a student of soci- 
ology and a member of the business community, that 
the two worlds need not be at odds at all. The one 
leads to greater sensitivity to human need and the 
other to workable, practical approaches to meet the 
need. Society requires both, and in some kind of 
reasonable balance and creative league. 

A couple of years ago, when I was serving as chair- 
man of the Pacific telephone community relations 
team in my home area, the Boyle Heights community 
of East Los Angeles, we dug pretty deeply into this 
question of education and other questions of con- 
cern. We visited much of the area and talked with 
many people, researching what the problems were 
from the point of view of the customer — telephone 
service problems and broader problems as well. 

We talked at length with teachers, among others, 
and the consensus was that the reason the educa- 
tional level was so low and there were so many drop- 


outs was that the kids never learned to read well. 
They were never encouraged to read in the home. 
There was no environment in which they could see 
books, admire books, learn to like books, feel com- 
fortable with books. 

They would do some reading in grammar school 
and in junior high school, but they would never 
really read well. By the time a youngster got to high 
school he was in bad shape, because he couldn't 
understand what he was reading. He would try to 
fake it, and eventually the teachers would discover- 
he was faking. 

This inability to understand what he was reading 
smothered the learning process and confused the 
student to the point where he no longer wanted to 
attend school and out he would go. It was much 
easier to go to work digging a ditch or doing some- 
thing else where little or no education was needed 
than to try to make a fresh start at learning to read. 
He now was too far behind. 

With this need as our base, we have provided 
books in the places where the youngsters congregate. 
They weren't going to libraries, which often are miles 
from their homes, so we took libraries to them. Tele- 
phone company people contributed the books in 
response to our drive — about 5,000 books in all. 

The team gave almost 1,000 books to the Variety 
Boys' Club, which tripled the size of their library 
and brought it up to date. 

About 300 books, including some sets of encyclo- 
pedias, went to the Youth Opportunity Board of 
Greater Los Angeles, which is a Federal program for 
teaching dropouts and getting them back into school. 
It had no library at all until we gave them a start. 

We helped the Halfway House start a library. This 
is a temporary residence, during a brief adjustment 
period, for former dope addicts who have just been 
released from jail. 

The library at the Salesian Boys' Club was a tele- 
phone company project from the beginning, and 
about 2,000 books have recently been delivered and 

are being categorized and shelved there. 

Getting books into these and other places where 
the kids can feel comfortable with them will help a 
great deal, but much more needs to be done. 

Our community relations team wanted to take 
two other steps in the educational area. One 
step would have motivated the youngsters through 
some kind of inexpensive slide-film presentation 
concentrating on East Los Angeles people who now 
have good jobs with the telephone company or other 
businesses. This could show the youngsters that there 
is opportunity for them if they work for it. 

The other, and more fundamental, step would have 
provided individual tutoring to youngsters who 
needed it in reading or other subjects. People in busi- 
ness represent a great variety of expertise — just about 
anything the kids would require — and quite a num- 
ber of telephone people, in fact, have volunteered 
to help in such a program. 

We somehow have failed, however, at least so far, 
to get the motivation and tutoring programs off the 
ground. Perhaps we will make the grade yet. 

So long as a real need is being met intelligently, 
business should not be reluctant, as I see it, to get 
into fields that may at first blush seem new or strange 
or where there may be the fear of stepping on some- 
body else's toes. The tutoring program, for example, 
would be welcomed, not only by the youngsters but 
by the school system if planned cooperatively. 

Such programs are needed in the best interests of 
the community and business. I don't know a single 
boy in East Los Angeles who considers a businessman 
an idol. The idols are ballplayers, teachers, priests, 
social workers. Except for the ballplayers, these fig- 
ures personally know and care about the boys as 
individuals and are known in the community. 

Certainly we're not interested in being idolized. 
But being known for genuine concern about people 
is something else again. 


Digging beneath the surface as a company, gaining 
true understanding of a basic problem such as edu- 
cation, and then acting on this understanding will, 
in the long run, not only help others individually, but 
also will improve employee recruiting prospects and 
will upgrade the community generally. 

All of the problem-solving should not be left to 
government. To do this would be ducking individual 
and corporate citizenship responsibilities. 

When families with moderately good incomes 
choose to stay in East Los Angeles I feel they can, in 
a small way, help improve the appearance and the 
environment of their neighborhood by what they do 
with their homes. 

On the other hand, when people who can afford 
to make some improvements move away instead, 
they leave a vacuum. The vacuum usually is filled by 
people of lesser means so that there is a continuing 
process of deterioration in the housing. 

But, even so, you don't have to live in East Los 
Angeles in order to be of some help here, particularly 
in something like tutoring. If someone comes in from 
outside and immediately offers too much advice, 
there is resentment, but if the outsider's attitude is 
right and he can give genuine help, he will be 

Los Angeles, sprawling though it may be, is, after 
all, one city. I don't want to sound corny, but I love 
my city. Books and articles recently have dealt with 
Los Angeles as a psychologically unsound place in 
which to live. Our smog gets plenty of attention. The 
riots have been analyzed in print again and again, it's 
almost as though people are saying, when they know 
anyone will visit Los Angeles, "Oh, he's going where 
the riots were." 

1 don't minimize the problems underlying the riots. 
I know our city faces monumental problems. But 
there are voices I call "silent people" who speak for 
Los Angeles at such a time. These silent people are 
statues erected by our citizens over the years because 
they represent some truths we believe in. 

For instance, a bust of Abraham Lincoln at the 
county courthouse speaks for justice. 

A monument on Bunker Hill depicting a victory of 
Mormon soldiers during the early growing pains of 
our city speaks of our heritage, which is a rich and 
varied heritage, San Francisco to the contrary — not 
exclusively a Mexican heritage by any means. 

In Forest Lawn, where our baby boy, Paris, is 
buried, there are statues of two little girls that speak 
of hope. The one called the duck baby reminds me 
of the poem that talks of a child looking up, holding 
wonderment in his hands like a cup. 

With all of our problems in Los Angeles, we do 
look up, we do hold wonderment like a cup. 

The people I am concerned with are truly inter- 
ested in solving their own problems. This is tlie most 
important thing to remember, I feel. They have much 
to contribute to our society, and if they can know 
opportunity, we all will gain. D 




Telpak, WATS rates revised 

New rates for bulk communications 
services will become effective May 1 
under tariffs that AT&T recently filed 
with the Federal Communications 
Commission. AT&T has proposed the 
elimination of Telpak A and B, bulk 
communications services of 12 and 24 
channels respectively, revised private- 
line telephone rates, increased pri- 
vate-line telegraph rates and rates for 
teletypewriter equipment installed on 
customer's premises, and introduced 
a new service for high-speed data and 
facsimile transmission. AT&T also sub- 
mitted proposed increases in Telpak 
C and D rates, bulk communications 
offerings of 60 and 240 channels. 

In another service change. Inter- 
state Wide Area Telephone Service 
(WATS), which offers long distance 
calling at fixed monthly rates for either 
full-time or measured-time service, 
has been expanded to include inward 
service. At the same time, the mini- 
mum number of hours of measured- 
time WATS has been cut from 15 to 
10 per month, with the minimum 
charge reduced proportionately. Rates 
for additional hours of calling have 
been reduced by five to nine per cent. 

Accurate synthetic speech produced 

Accurate synthetic speech is now be- 
ing produced with the aid of a com- 
puter-generated model of the vocal 
tract developed by Dr. Cecil H. Coker 
of Bell Laboratories and Professor O. 
Fujimura of the University of Tokyo. 
The model, stored in a computer, 
IS actually a geometric description of 
vocal tract areas as they are shaped to 
produce various sounds. When syn- 

thesizing speech, a researcher can see 
an outline of the vocal tract displayed 
on an oscilloscope and, at the same 
time, hear the sound which corre- 
sponds to the displayed shape. By 
making adjustments at the computer 
console, the researcher can change 
the shape and sound simultaneously. 
Thus, synthetic speech can be im- 
proved with both visual and aural aids. 

This research is being conducted to 
obtain basic information about speech 
sounds which may be useful in devis- 
ing a more efficient means of en- 
coding speech signals and transmitting 
them over communications lines. It 
also may help in the development of 
a practical speaking machine for 
"reading out" data stored in, or gen- 
erated by, computers. 

International rates cut 

A telephone call to the United King- 
dom now costs one-tenth of what it 
cost 40 years ago when overseas serv- 
ice was inaugurated. 

New station-to-station rates that 
went into effect in February now en- 
able customers to call Europe at costs 
25 to 37 per cent lower than the 
former $12 person-to-person rate for 


a three-minute call. Rates for time 
beyond the initial three-minute period 
have also been cut. The changes will 
produce annual savings of $6.9 mil- 
lion for U. S. customers. 

AT&T has also instituted new rates 
that will save U. S. and Canadian tele- 
phone users an estimated $2 million 
annually. Reductions in three-minute 
rates range from five cents to $1.10, 

Business seminar opens 

A second Bell System Business Com- 
munications Seminar will open in New 
York City this spring. Patterned after 
a similar facility in Chicago, the sem- 
inar is designed to give executives — 
representing all segments of business, 
industry and government service — an 
insight into the ways modern com- 
munications can contribute more 
effectively to corporate planning, 
growth and profit. One- and two-day 
seminar sessions inspect the implica- 
tions of communications in relation 
to the information explosion. 

Improve synthetic quartz growing 

An improved method of growing man- 
made quartz crystals, to replace nat- 
ural quartz crystals in all communica- 
tions devices, has been developed by 
Albert A. Ballman and Robert A. 
Laudise of Bell Laboratories and David 
W. Rudd of Western Electric. 

The new method produces syn- 
thetic quartz crystals that control fre- 
quencies with the same stability and 
precision as natural quartz crystals. 
Synthetic quartz crystals grown by the 
new method will also produce sub- 
stantial savings. 

New technical education center 

A new Bell System Technical Educa- 
tion Center will be opened this fall 
in Lisle, Illinois near Bell Laboratories' 
recently completed Indian Hill facility. 
The center is an extension of the Bell 
System's program of continuing edu- 
cation for employees on scientific and 
technical assignments. Unique in the 
field of continuing engineering educa- 
tion, the center will provide "tailor- 
made" instruction and assistance for 

all employee levels of Bell System 
engineering organizations. 

One of the major assignments of the 
center will be to help newly employed 
engineering graduates to become 
communications engineers. Other 
courses will assist engineers in keep- 
ing up to date with changes in tech- 

The education center will also train 
instructors who will take the continu- 
ing education program into the indi- 
vidual telephone companies. 

Two laboratories completed, manufacturing plant under construction 

Bell Telephone Laboratories recently 
completed two new research and de- 
velopment centers in Holmdel, N. J. 
and Indian Hill, 111. 

Designed by the late Eero Saarinen 
for the utmost flexibility, the Holmdel 
laboratory deals with customers' tele- 
phone equipment, transmission 
equipment, data communications, 
and communications science studies. 

The Indian Hill Laboratory, near 
Chicago and Western Electric's Haw- 
thorne Works, is devoted to develop- 
ment of the electronic switching sys- 
tems that ultimately will replace the 
electromechanical systems now in the 
nation's communications network. 

Meanwhile, Western Electric is ex- 
panding its production facilities in the 
Southwest. The new Phoenix, Arizona 
plant, which will manufacture wire 
and cable products for Bell com- 
panies, will become WE's 15th major 
manufacturing facility when it opens 
late this year. 

Initially, the Phoenix plant will pro- 
duce up to 42 billion conductor feet 
of cable a year, and will ultimately 
have an annual capacity of approxi- 
mately 70 BCF. When fully opera- 
tional, the plant will employ nearly 
1,000 persons, most of whom will be 
recruited locally. Training of new 
machinists is already in progress. 

Be/1 Labi ncu Induin flill LiLvnMnry in llhnn 


New sound spectrograph developed 

A faster, more accurate, and more 
versatile sound spectrograph — a de- 
vice that produces a printed diagram 
of the frequencies and amplitudes of 
sound — has been designed by A. J. 
Presti, of Bell Telephone Laboratories. 
The new spectrograph can make 
spectrograms directly from standard 
mylar magnetic recording tape in 80 
seconds. Earlier models produced a 
spectrogram in five minutes and re- 
quired the intermediate step of trans- 
ferring the taped information to plated 
drums or metal loops. Use of the 

standard tape has resulted in better 
fidelity and lower background noise. 
Sound spectrographs — conceived 
at Bell Labs more than 20 years ago — 
have long been valuable for a variety 
of research projects. They have been 
used to analyze speech, diagnose dis- 
eased hearts or malfunctioning jet 
engines, investigate noise to improve 
soundproofing, provide better com- 
munications equipment, and identify 
voices, aircraft, ships or submarines. 

Excitonic molecule found 

The first experimental observation of 
the excitonic molecule has been 
made at Bell Telephone Laboratories. 
The excitonic molecule, which was 
found in silicon, is made of two elec- 
trons and two positively charged enti- 
ties that solid-state physicists refer to 
as "holes." Holes are unoccupied 
energy levels that electrons could fill. 
Unlike ordinary molecules in which 
two or more atoms combine, the exci- 
tonic molecule is a stable complex of 
two pairs of electrons and holes. 

Science aids widely accepted 

The Bell System's Aids to High School 
Science program has received a strong 
vote of confidence from physics edu- 
cators, according to a recent study of 
use and effectiveness. The study indi- 
cated that U. S. high school physics 
teachers have accepted both the ap- 
proach and the material used in the 
five demonstration units designed for 
classroom, use, and the four experi- 
ments for students of outstanding 
ability and interest. Subjects range 
from wave behavior and magnetism 
to crystals. 

The study found that two-thirds of 
the physics teachers tested are using 
some science aids materials. It also 
indicated that the teaching level of the 
material appears to be well matched 
to educators' requirements, and that 
continued development of similar 
teaching aids is desired by virtually all 
educators who have used units in the 
program. The teachers also endorsed 
the planning and execution of presen- 
tation meetings with Bell System 

Intelstat n is 100th 

Bell Laboratories and Western Electric 
recently celebrated the 100th launch 
from Cape Kennedy of a satellite 
steered into orbit by a BTL-WE guid- 
ance system. This occurred with the 
launch of the new Pacific satellite, 
Intelstat II, on January 11. The occa- 
sion, which was marked by cere- 
monies at Cape Kennedy, was also the 
10th anniversary of the Bell System 
guidance facility at the Cape. 

The BTL-WE guidance system was 
used to steer the satellite into a trans- 
fer orbit from which it was later placed 
in a synchronous equatorial orbit by 
the firing of the satellite's apogee 
motor. The successful guidance of In- 
telstat II increases the Bell System's 
record of successes in space orbits to 
more than 260. 

Silicon transistor improved 

Silicon transistors able to amplify at 
higher frequencies than any presently 
in use have been developed by Dr. 
Rudolf Schmidt of Bell Laboratories. 
Improved fabrication techniques, 
allowing the internal dimensions of 
the transistors to be reduced, are re- 
sponsible for their ability to operate 
at higher frequencies without devel- 
oping short circuits. 


American Telephone and Telegraph Company 
195 Broadway, New York, N. Y., 10007 

Bulk Rate 
U.S. Postage 


Hartford, Conn. 
Permit No. 3766 

Librarian, Periodical Dept. 
Kansas City Public Librnry 
Kansas City, Mo., 


Primed in U.S.A. 


May /June 1967 


telephone magazine 



telephone magazine 


Leighton C. Cilman, Editor 

Donald R. Woodford, Managing Editor 

Al Calalano, Art Director 

Harold N. Schott, Jr., Edwin F. Nieder, Assistant Editors 

H. I. Romnes, Chairman of the Board 
Ben S. Gilmer, President 
lohn D. deButts, Vice Chairman 
Charles E. Wampler, Secretary 
John J. Scanlon, Treasurer 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

ON THE COVER — New manufacturing methods are exemplified in the continuous 
line vacuum processor, upper left, which makes thin film circuit plates, and in a 
new furnace which diffuses impurities into silicon crystal. Lower left. Western 
Electric Engineer Frank Minardi and Bell Laboratories' Bob Moore pool skills to 
get integrated circuits into production for Touch Tone® Trimline® phones. 
See Page 18. 


New Tools for Education 2 communications is playing an increasingly important role in helping 

schools stretch teaching talents. 

100 Million Telephones 8 The nation celebrates a significant milestone in communications history. 

A Time of No Longer and Not Yet 10 Businessmen seek new ways of dealing with social problems as the 

old rules of corporate citizenship no longer apply. 

Bell Forum 16 The Bell system's views on the communications aspects of the proposed 
Public Television Act of 1967. 

Bridging the Gap 18 New technologies like integrated circuits call for a closer relationship 
between research and manufacturing. 

Bell Reports 26 a summary of significant developments in communications. 

Taking Stock of Share Owners 29 Listening to what share owners have to say helps create mutual 

understanding between owners and managers of the business. 

To help students keep pace with the knowledge explosion- 
while freeing teachers for more individual instruction- 
modern communications is helping to provide 

New Tools for Education 

By Tom Mahoney 

In a first-grade classroom in Westchester County, 
N. Y., a young student sits at a computer console for 
an exercise in letter identification. In Grand Rapids, 
Michigan, engineering students follow diagrams pro- 
jected on a large screen as their professor lectures 
from 90 miles away. And a doctor in Green Bay dials 
a University of Wisconsin telephone to obtain up-to- 
date information on the problems of delivering twins. 

In capsule form, these are some of the present uses 
of new educational tools that will play an increasingly 
important role in the future. These and many other 
new educational techniques are being explored by 
public and private schools, colleges and universities 
and businesses of almost every description in an 
effort to meet the current challenges of education. 

While an absolutely up-to-the-minute portrait of 
this educational ferment cannot be drawn — reality 
won't sit still long enough — it is possible to recognize 
some of the main problems to be solved, and the 
major trends emerging as educators, businessmen, 

A long-time freelance writer of books and magazine articles - 
principally in t/ie fields of science, business and education — Tom 
Mahoney also has served on the staffs of both Fortune and Look. 

government officials and parents seek solutions. 

On the problem side, the so-called explosions in 
population and information have given America's 
teachers the task of teaching more knowledge to 
more students than ever before in history. Next there 
is the problem of quality. Schools have a new mathe- 
matics, a new chemistry, a new physics, a new biology 
and are about to have a new history. All these dis- 
ciplines require more teaching of teachers, as well as 
speeded-up and "enriched" schedules for youngsters. 

Compounding the problem is the fact that pupils 
are increasing at a faster rate than teachers at every 
level. We now have about 2,350,000 primary and 
secondary school teachers and will need two million 
more by 1975. At the college level, an anticipated 50 
per cent increase in enrollment in the next decade 
calls for a significant increase in faculty. 

Finally, there's the problem of costs. With an outlay 
of roughly $48 billion this year, education on the 
national level has become an industry second only to 
defense in cost. In most communities more than half 
of the dollars collected through local taxes are spent 
on education. 

Fortunately, an "explosion" in educational tech- 

nology — in part based on the expanded use of com- 
munications — promises to help schools stretch their 
teaching talents to meet the rising tide of students. 
"Schools have to admit that the electronic age is 
here," said Harold Howe, U.S. Commissioner of 
Education, "and that there are many ways of com- 
municating and of handling information." 

Basically, the aim of the new educational tech- 
nology is twofold: (1) To make resources go farther; 
in other words, increase the effectiveness of existing 
teachers, libraries and experts in various fields; and 
(2) To improve the quality of the educational experi- 
ence; educators have already found that the new 
teaching aids linked by communications often can 
get more across to more students — more vividly 
and with deeper retention — in less time. 

Committee urges innovation 

A broad-scale program that emphasizes the multi- 
sensory nature of the learning process was outlined 
a few months ago by the Committee for Economic 
Development's subcommittee on efficiency and in- 
novation in education. A well-equipped system, the 
subcommittee said, should consist of centralized tape 
libraries from which schools could select, for exam- 
ple, an entire course of instruction or specialized 
lectures prepared by great teachers in specific areas; 
electronic teaching aids like those used in language 
instruction; programmed learning systems for de- 
tailed, repetitive instruction; and scanning devices 
linked to libraries and offices. 

The subcommittee also recommended closed- 
circuit television systems and individual video tape 
players to enable each classroom to use top-quality 
course materials, as well as a flexible educational TV 
network to bring a variety of instruction to the class- 
room. In addition, the sub-committee recommended 
the use of computers for cataloguing and retrieving 
information, grading examinations and other admin- 
istrative functions. 

While the fulfillment of the possibilities outlined 

by the CED subcommittee may take some time to 
achieve, piecemeal parts of the system exist now. 
Television, for example, is being used in a variety of 
ways, and lectures and discussions among teachers 
and students in widely separated areas — linked 
together by the Bell System's Tele -Lecture service- 
are being conducted with increasing frequency. 

Computer-assists accelerate 

The newest growth area of educational technology, 
however, is in the application of computers. At York- 
town Heights, N. Y., for example, the U. S. Office of 
Education is supporting a center "for the demonstra- 
tion of Computer Assisted Instruction (CAI) and other 
educational media." At the center. Bell System facili- 
ties connect one control console with a computer at 
Johns Hopkins University in Baltimore, and a second 
console — with a viewing screen, a slide projector and 
tape recorder — to a nearby computer laboratory. 

With this equipment, elementary school children 
are learning letters and beginning to read. The "new 
mathematics," including the concept of numerical 
"sets," also is taught there. 

Dr. C. Alan Riedesel and Marilyn N. Suydam of 
Penn State University describe CAI as "a feasible tool" 
that offers "greater potential than previous innova- 
tions, such as sound film, television, radio, filmstrips 
and conventional programmed instruction." 

The Yorktown Heights complex is also used for 
demonstrating problems in economics for sixth grade 
students. With the computer, children can "manage" 
a toy store and toy factory, or deal with the problems 
of an Affairs Officer of the Agency for International 
Development in Sierra Leone. In an economics proj- 
ect, the computer asks students to "imagine that you 
have just been made Ruler of Lagash, a City-State of 
Sumer, in the year 3500 B.C. Twice yearly your hum- 
ble Steward, Urbaba, will report to you on the eco- 
nomic condition of the kingdom. Guided by these 
reports, you will decide the use of your grain and 
other resources, trying to keep your population stable 

and well fed." The computer states that Urbaba 
reports that the grain is harvested and stored, and 
asks how much to feed the people and how much 
to plant for the next crop. For 36 simulated years, 
there are twice-yearly reports, and sometimes addi- 
tional bulletins of disaster, such as: "3,815 bushels 
of grain have rotted," or "507 bushels of grain have 
been eaten by rats." 

Instead of feeding his people, one young king 
planted all his grain and the exercise ended when the 
computer responded: "Your population has de- 
creased to zero. Do not go on. Call the teacher." 
Nearly all of the boy- and girl-rulers, however, man- 
age Lagash's affairs well enough to win from the 
computer this accolade: "You have done well. The 
Gods are pleased. Goodby." 

Students who participate in the economic exer- 
cises with the computer learn as much as those who 
study economics under a good teacher in a conven- 
tional classroom, but in about half the time. 

"Insofar as our experience goes," Dr. Richard L. 
Wing who directs the Yorktown program reports, 
"computer-based games . . . seem more effective than 
conventional methods when the time investment of 
the student is taken into consideration." 

Similar studies of CAI and related technology are 
in progress at schools and research centers across the 
country. In Palo Alto, California, fourth, fifth and sixth 
graders drill in math and spelling by using Bell System 
teletypewriters to communicate with a computer at 
Stanford University. The success of this experimental 
program has resulted in the first use of a computer 
for regular teaching in an American elementary 
school. The program is being broadened to include 
some 150 first-graders who receive half an hour of 
instruction daily in reading and math by a computer. 
This system provides teaching material, keeps track 
of pupils' scores, and analyzes the results for the 
teacher and staff. Modifications in the program for 
individual students may be made as they seem 
desirable. The teacher is also freed from the tedious 

drilling of pupils, and has more time available for 
individual instruction. Thus, rather than automation 
resulting in impersonaiizing education, as some have 
feared, the new technology actually increases the 
opportunity to tailor the educational process to 
individual needs. 

Computer uses in education are not confined to 
teaching situations. Even burgeoning administrative 
problems posed by the student boom bid for their 
share of computer-and-communications relief. One 
example is at Indiana University where students 
register for classes by telephone. Instead of going to 
the field house and standing in lines for hours, a 
student takes three minutes to phone the registrar's 
office and submit a list of the classes he wants to 
attend. His requests are fed into a computer, which 
keep an up-to-the-minute record of enrollment in 
each course. 

New libraries needed 

With both the body of knowledge and student 
populations expanding so fast, libraries are becoming 
more important in schools, and the pressure on them 
increases. As new techniques are employed to make 
libraries go further, sharing the new media on as wide 
a basis as possible also comes in for consideration. 
Access to audio tapes, as well as teletypewriter trans- 
mission of book and article reprints over the existing 
information network is being adopted on a wide scale 
by college, public and specialized library systems. 

At the University of Virginia Library, for instance, 
a teletypewriter works in conjunction with a com- 
puter to provide immediate reference by other col- 
lege libraries in Virginia. And in Maryland and 
Indiana, local public libraries are connected together 
by communications facilities to increase the average 
4,000-volume small library's resources to about four 
million volumes that are available throughout the 
state. In the area of specialized libraries, the National 
Library of Medicine is using a computer to speed 
publication of its index of medical articles used by 

all medical schools throughout the country. 

On the national scale, EDUCOM— formally known 
as Interuniversity Communications Council— is work- 
ing toward the goal of a nationwide library system. 
An organization of 62 institutions, EDUCOM believes 
that an "electronic multimedia information network 
ultimately must make material in many forms almost 
instantly available to scholars wherever on the 
continent they may be." 

In all these cases, the communications facilities 
involved can be used in many ways, such as arranging 
for inter-library loans of books, films and other mate- 
rials; confirming research efforts; helping to find 
alternate sources for needed material; and speeding 
up orders for photo duplicating. 

Microfilm and the newer microfiches and micro- 
images enable libraries to house much data in tiny 
space. The latter, for example, can shrink a 1,245-page 
Bible into a 2-inch square. 

Beyond the kind of facilities envisioned lies what 
Michel Beilis of AT&T calls the "eventual multi- 
media information center composed of regional, state 
and national systems." A former university teacher 
and administrator himself, Mr. Beilis is now the Bell 
System's national coordinator for education in AT&T's 
Marketing Department. He foresees the day when 
"the Battle of Britain — complete with taped Churchill 
speeches, filmclips of London on fire, and an analysis 
of the event by historians — will be, as it were, deliver- 
able to anybody anywhere who wants to study it, 
whether in a classroom, a dormitory or even in his 
own home. 

"The instrumentalities already exist to transmit the 
contents of books, tapes and films over the existing 
information network. To go from local to regional to 
state to national requires only what everything worth- 
while requires: planning, purpose, patience, dedica- 
tion — and, of course, money," Mr. Beilis maintains. 

In vision of future, multi-media information 

center (left) might offer: audio and video tape playback, 

computer assisted instruction, print-outs of 

researcti material, photocopies of pictures and documents, 

plus contents of both specialized and general 

libraries — all instantly available via Bell System 

information netw/ork (blue bands) to homes, 

offices, classrooms and dormitories (right). 

Before the full benefits of a new educational tech- 
nology can be obtained, some problems remain to 
be solved. While the technical side seems feasible, 
human and legal questions remain. 

For one thing, the new developments are coming 
so fast that it is becoming increasingly difficult for 
teachers to keep pace with the new technology. At 
the same time the new technology is bringing new 
roles for teachers, librarians and libraries. 

"A teacher who only dispenses information can be 
dispensed with," says Harold Gores, president of 
Educational Facilities Laboratories, a non-profit cor- 
poration established by the Ford Foundation. "From 
now on, things should be taught by machines and the 
teacher raised to the level of meaning." The teacher, 
adds William C. Harley of the National Association of 
Educational Broadcasters," will cease to be a source of 
inadequate and often outdated information and will 
becomeaguide through the labyrinth of alternatives." 

"The teacher will become an orchestrator rather 
than a dispenser of information" predicts Mr. Beilis. 
"She can choose from many resources what is best 
suited for her class. Hopefully, she will be free to 
spend more time inspiring her students and doing 
the things that only a good teacher can do." 

Economic problems also are receiving top-level 
attention. Federal legislation passed in 1965 makes 
more innovation in educational media possible. And 
the cost of computers and computer programs are 
shrinking. Copyright problems that arise from wide- 
spread reproduction of printed material have so far 
been among the thorniest issues in the new educa- 
tional technology, but here, too, teams of experts 
are striving for an equitable solution. 

No one believes tomorrow's educational problems 
are insoluble. As the nation's needs mushroom, tech- 
nological help in stretching educational resources 
will have to play an ever more important role. D 




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Somewhere in the United States in early May another 
telephone was installed. Not an unusual occurrence, 
by any means. But the action was significant: It was 
the nation's 100 millionth telephone. 

The milestone highlighted the fact that Americans 
are the most communications-minded people on 
earth. Although the United States has only six per cent 
of the world's population, it has nearly half the tele- 
phones in the world. 

It took the U. S. telephone industry 77 years to 
reach its first 50 million phones, and only 14 years to 
double that number. Forecasters estimate the 200 
millionth telephone will go into service by 1991. 

Ceremonies commemorating the industry's 100 
millionth telephone were held at the White House on 
May 11 at which time President Johnson spoke simul- 
taneously to governors throughout the country and 
Puerto Rico over a specially arranged communica- 
tions network. 

Participating in the ceremonies were represent- 
atives of both the Bell System and the United States 
Independent Telephone Association. The 23 Bell 
System companies, which serve in all states except 
Hawaii and Alaska, has about 80 million telephones, 
while USITA represents some 2,300 independent tele- 
phone companies serving in 49 of the 50 states and 
in Puerto Rico. D 

The old rules under whi 

business operated with little conce 

for social needs no longer ho 

But business has not yet successfu 

worked out new wa 

to serve the communi 


A Time of No Longer and Not Yet 

The 300-plus men and women in the sparkling new 
auditorium on the University of Illinois' Chicago Cir- 
cle Campus were there to lay bare the soul of the 
corporation. Mostly businessmen and educators but 
with a sprinkling of clergymen and labor and govern- 
ment representatives, they were to spend two days 
discussing the social responsibilities of business, a 
subject as ancient as man's thinking about ethics and 
yet one that cries for fresh insights. 

The group harbored no illusions that they would 
find quick answers — indeed, any answers at all. The 
subject is too broad for that. They hoped, however, 
that the meeting would produce some guidelines 
and, equally important, represent the beginning of 
a continuing dialogue between the business, govern- 
ment, and academic communities on a subject that 
needs their combined thinking and action. 

The idea for the meeting was spawned by the 
University of Illinois and nurtured by a grant from the 
Illinois Bell Telephone Company. "To the best of my 
knowledge," said Illinois Bell President James W. 
Cook, "there has not been an in-depth attempt to 
gather people from many . . . backgrounds with dif- 
fering . . . beliefs and give them the time and the 
place in which to examine the subject of this 

Illinois Bell's purpose in underwriting the sympo- 
sium was not, as Mr. Cook explained, wholly altru- 
istic. He and the other businessmen were looking for 
advice and counsel. 

"We live at a period between "No Longer" and 
"Not Yet," Mr. Cook told the meeting. "Many of the 
old rules that guided business no longer hold. But we 
have not yet successfully worked out new ones to 
take their place. The earlier concepts under which 
business operated pretty much as it pleased with little 

concern for the general needs of the community no 
longer hold. But we have not yet found wholly satis- 
factory means by which a business can reach out Into 
the community without undergoing some censure 
either for exerting undue pressure or for spending 
too much of the owner's money. We have not yet 
found a generally accepted balance between a busi- 
ness's logical and valid need for profit and its obliga- 
tions as a corporate citizen— whatever they may be." 

The real dilemma for today's businessman as ex- 
pressed by Mr. Cook, is not whether he should or 
should not accept responsibility for helping to solve 
the nation's ills. His dilemma, rather, is how to iden- 
tify the public areas in which he can properly and 
helpfully operate. 

Dr. Howard R. Bowen, president of the University 
of Iowa and one of the speakers at the symposium, 
observed that businessmen today are torn between 
two obligations: one to society as a whole and the 
other to the concept of free enterprise. Most busi- 
nessmen, he said, are "quite rightly . . . deeply con- 
scious of limitations on their power to choose policies 
which deviate very far from their profit-making 
interests. They feel, and they are, hemmed in by com- 
petition, by labor unions, by government control, and 
by the need to protect their sources of capital. Their 
room for maneuver is severely limited." 

And yet despite these limitations, the speakers at 
Chicago pointed out, more and more companies are 
finding that opportunities are open to them, that 
a balance between social and economic obligations 
can be reached. As a result, many businesses are 
breaking away from the traditional, somewhat pas- 
sive, concept of social responsibility that once pre- 
vailed. Gone are the days when social responsibility 
stopped at contributing to the Community Chest — 


"The economic contribution a person makes is influenced by the 
home he was raised in, the schools he attended, the food he ate 
— or didn't eat. Moreover, our economic institutions must bear a 
portion of the guilt we all share for the continuation of discrimi- 
nation in its various forms" . . . Gardner Ackley, chairman. Council 
of Economic Advisors. 

worthy though that may be. "Social responsibility in 
that sense," said Harvard's Emmanuel G. Mesthene, 
"is what the original Rockefeller was dispensing in 
the form of shiny new dimes." 

Today's businessman has come to recognize that 
his responsibility to society is much greater — and not 
just from a humanitarian standpoint. "Everything that 
affects the life of a community, affects the companies 
that do business there." Mr. Cook said. "If the com- 
munity prospers, the companies are in a position to 

prosper, too If the community is gripped by social 

unrest, this unrest will seep into the local businesses 
and take its toll." 

In a way — as one of the speakers at Chicago 
emphasized — business has no choice but to involve 
itself more deeply in the life of the community. "Since 

the efforts to meet the society's most pressing needs 
will move ahead regardless of what business does," 
said Arjay Miller, president of the Ford Motor Com- 
pany, "business has only two choices — to become 
an unwilling participant in policies and programs it 
has had no hand in developing, or to join sensibly 
and purposefully in helping to map outsound courses 
of action." 

The social problems which business leaders are 
trying to face up to are, of course, partly of their own 
making. Expanded business activity and technological 
innovations have helped give this nation an unprece- 
dented standard of living. But at the same time, they 
have brought about changes that have had substan- 
tial and, in some instances, adverse effects on social 
and economic structures. 


Because of this "deep and all-pervading" change, 
Mr. Miller stated, "no institution — and business least 
of all — can escape the need to reassess its basic role 
in our society." Mr. Miller added that business has a 
special challenge. "Because the corporation is itself 
a primary instrument of change," he said, "it must 
share in the responsibility for dealing with change." 

To help meet this challenge, the Chicago sympo- 
sium pulled together some guidelines for action, 
broad though they may be. In general, they fell into 
three categories: (1) the need for business to devote 
more attention to protecting human values in a time 
of great technological change; (2) the need for more 
cooperation among businesses and between business 
and government in tackling social problems; and (3) 
the need for business to apply voluntarily its unique 
expertise to finding solutions for society's problems. 

Addressing himself to the first category. Dr. Bowen 
said business has an obligation to ease the impact 
of technological change. Much could be accom- 
plished, he suggested, through systematic manpower 
planning, providing workers who lose their jobs with 
assistance in finding new jobs, and vesting certain 
benefits such as insurance and pensions. Dr. Bowen 
also called on business to use new technology not 
only to increase productivity but also to improve 
working conditions. It is still an obligation of every 
employer, he said, to make work "a meaningful and 
satisfying experience." 

Two areas in which business could play an espe- 
cially important role. Dr. Bowen said, were those 
concerning education and discrimination. The cor- 
poration, he said, is more than merely a bystander 
and supporter of education — "it is itself a major 
educational institution." But, he argued, many com- 
panies are not fully meeting their responsibilities, 
especially to workers at the lower levels of skill. 

Along these same lines, business must increase its 
efforts to overcome discrimination in employment 
and job advancement. Neither laws against discrim- 
ination nor company policies that simply oppose 

discrimination will solve the problem. Dr. Bowen 
said. "A solution requires carefully designed positive 
efforts, and responsibility for these efforts necessarily 
falls upon the corporation." 

In the discussion at Chicago, it was acknowledged 
that competitive pressures make it difficult for busi- 
nessmen to proceed as rapidly in some areas of social 
responsibility as they might like. One solution. Dr. 
Bowen suggested, is for the leading, prosperous com- 
panies to set the "competitive norms which will 
eventually gain general acceptance." Another answer 
lies in the cooperative efforts of businessmen. "What 
may often not be in the interest of a corporation if 
done individually," Gardner Ackley, chairman of the 
Council of Economic Advisors, said, "may sometimes 
be in the interest of each if a group of corporations 
all support it." 

As an example. Dr. Ackley said, it may clearly be 
unprofitable for a single corporation to attempt to 

"The rising expectations of people everyw/iere for still higher 
levels of well-being are a kind of consumer demand that no realis- 
tic businessman could afford or would want to ignore" . . . Arjay 
Miller, president, Ford Motor Company. 


raise the economic status of the Negro. "Yet if a 
group of corporations engages individually or col- 
lectively in the effort, the impact on the future 
stability and efficiency of the community may defi- 
nitely advance the interests of each." 

Dr. Ackley added that it would be optimistic to 
"suggest that the problems of poverty, urban decay, 
delinquency, inadequate education, and health care 
can be solved by the local action of public spirited 
corporations, even with substantial participation by 
local government agencies and voluntary organiza- 
tions. Federal programs are also basic to the solution. 
Yet Federal efforts can often join those of local com- 
munities and business groups in finding solutions 
to national problems through local action." 

On the community level, he called attention to 
Chicago's "Jobs Now" program as representing an 
"imaginative and constructive response to some of 
the problems of disadvantaged youth" in which pri- 
vate employers, city and state government agencies 
are participating. "In many respects," he said, "it is 
being taken as a mode! for similar activities in other 
ghetto areas around the nation." 

Dr. Ackley added that "the Federal government has 
only begun to explore entirely new ways of enlisting 
the combined self-interest and public interest of pri- 
vate corporations in the great tasks of training the 
disadvantaged, rebuilding our cities, providing ade- 
quate transportation, and so on." He described this 
as "a challenge to the social inventiveness of both 
corporate and public officials." 

How can business best apply its experience and 
skills to the tasks which Dr. Ackley and others pre- 
scribed? Arjay Miller suggested two important roles: 

"First, the corporation must be an active participant 
in decisions as to how the society can make progress 
toward desirable goals with minimum sacrifice of 
other worthy goals. Second, the corporation must go 
beyond its traditional role of business enterprise and 
seek to anticipate, rather than simply to react to, 
social needs or problems." 

Mr. Miller added that given sound guidelines, 
business will find a way to accomplish the tasks that 
society expects from it. "The corporation," he said, 
"is a remarkably adaptable institution." 

The adaptability of the corporation, however, may 
be put to a much sterner test than many businessmen 
realize, according to Emmanuel Mesthene. Dr. 
Mesthene, who is executive director of the Program 
for the Study of Society and Technology at Harvard, 


"One of the major weaknesses of our educational system, espe- 
cially at the secondary and college levels, is that it is too insulated 
from the experiences of real life" . . . Howard R. Bowen, president. 
University of Iowa. 

views the current social ferment as the inevitable 
effect of powerful new technology. 

"Government, industry, education, and other 
institutions as well," he said, "are seeking new pro- 
cedures, new alignments, new organizational and 
management structures, as they try to grapple with 
the altered circumstances and exploit the new oppor- 
tunities that new technologies are forcing upon them. 
The point to stress is that none of these institutions 

is very likely to emerge unchanged from the 

Not only have new tools succeeded in mixing up 
and reorganizing previously distinct institutional 
roles and responsibilities. Dr. Mesthene observed, 
they have also blurred functions in the society at large 
that were previously either clearly public or clearly 
private. As examples, he cited the government-private 
industry relationships which have been forged in such 
national technological endeavors as the Apollo pro- 
gram and the operation of the communications 
satellite system. Dr. Mesthene sees the same thing 
happening in the area of social problems with "the 
role and importance of the corporation . . . deter- 
mined by the effectiveness of its partnerships with 
other institutions — chiefly government — in con- 
tributing to national goals that will increasingly be 
arrived at in public ways." 

What is evolving. Dr. Mesthene concluded, is a 
society in which the corporation will no longer enjoy 
a privileged position. "That then leaves business- 
men," he said "with no more responsibility than that 
of people to join with their fellows in the design of 
an intelligent society." 

And in part, this is what the Chicago symposium 
was all about. The businessmen who traveled from 
many parts of the country to attend the meeting indi- 
cated that they want to be more than mere bystanders 
in the design of an intelligent society. They want, as 
Arjay Miller put it, to "join sensibly and purposefully 
in helping to map out sound courses of action." 

Up to now, there has been more than a little 
confusion as to what are the social responsibilities 
of the corporation. Sound and durable answers are 
beginning to emerge, however, and out of discus- 
sions such as the one in Chicago will eventually come 
a blue print for active and positive involvement in 
social problems. The real concern is that time is 
running out. Business cannot long remain between 
"no longer" and "not yet" or the answer may one 
day be "too late." D 



of policy 
and opinion 

1 appreciate this opportunity to pre- 
sent the Bell System's views on the 
Public Television Act of 1967 (S. 1160). 

At the outset, let me say that we are 
in accord with the purposes of this 
Act. In our view it provides a sound 
start toward the development of a sys- 
tem of public television in this country. 

We claim no special competence in 
recommending the organizational for- 
mat that will best assure "freedom, 
imagination, and initiative" in the ex- 
pansion and development of non- 
commercial broadcasting. We are not 
educators. We are not broadcasters. 
Our business is communications. Con- 
sequently my further comments will 
be limited to those aspects of this Act 
and of various proposals for its 
further implementation which have a 
bearing on the field of communica- 
tions. My comments will be quite 
brief. For, measured against the full 
range of policy questions the Commit- 
tee must weigh to assure the vitality 
and the independence of public tele- 
vision, the question of that medium's 
particular transmission requirements 
is a relatively minor one. Nor does it 
bulk too large in the scale of the long- 
run financial requirements of a fully 
developed system of educational 

Transmission, or, as it is called in 
the bill, "interconnection," relates to 
the development of ETV in two ways: 

Editor's Note: The administration-proposed Public Television Act of 1967, which 
recently passed the Senate and is now before the House, calls for establishment 
of a Corporation for Public Television and proposes other steps toward strength- 
ening non-commercial broadcasting. 

During Senate hearings on the act, a long list of witnesses representing edu- 
cational and commercial broadcasting organizations, communications common 
carriers, and others gave their views on the proposed legislation. Among those 
who testified was Kenneth G. McKay, vice president-Engineering of AT&T. 
Pointing out that "our business is communications," Mr. McKay limited his 
comments to those aspects of the bill that concern the field of communications. 
His text follows: 

first, in the pattern of program distri- 
bution or of interconnection that 
might be most appropriate for public 
television and, second, in the prospect 
that satellite transmission might offer 
economies from which ETV might de- 
rive some measure of financial 

I have three main points I would 
like to make on these matters: 

The first is that, whatever the pat- 
tern of ETV's transmission require- 
ments may turn out to be, the Bell 
System is going to do its very best to 
meet them. It is now just 40 years since 
the Bell System first demonstrated 
long distance television. On April 7, 
1927, President Hoover, then Secretary 
of Commerce, and Walter S. Gifford, 
the president of our company, con- 
versed between Washington and New 
York and, while they talked, Mr. Gif- 
ford watched Mr. Hoover on a TV 
screen 2V2 inches square. As you 
know, beginning in 1948, first on a 
regional and then on a national basis, 
our facilities have provided the means 
for the highly developed and flexible 
system of network television we have 
in this country today. Our ability to do 
so is very largely based on develop- 
ments in our own Laboratories — 
notably continuing advances in coaxial 
cable and microwave radio relay sys- 
tems. And our efforts to develop tele- 
vision transmission continue apace — 

witness the first satellite transmission 
of television via Telstar. 

However, as we told this Committee 
last August, our interest in this busi- 
ness is not a proprietary one. We 
recognize that we shall continue in it 
only so long as our services remain the 
best and most economical way to do 
the job. It is in the same spirit that we 
face the prospect of a considerable 
expansion of the program trans- 
mission requirements of educational 

My second point is this: we believe 
that communications satellites can 
offer significant economies in domes- 
tic communications of all kinds, in- 
cluding television transmission. To this 
end the Bell System last December 
proposed to the Federal Communica- 
tions Commission a Space-Earth Com- 
munications System that is designed to 
provide for the optimum use of 
satellites and terrestrial facilities for 
communications services of all types 
— TV, voice and data — between now 
and 1980. 

This proposal reflects our conviction 
that the expanding requirements of all 
users of common carrier communica- 
tions services, including commercial 
TV and ETV, can most economically be 
met by a multi-purpose satellite sys- 
tem integrated with terrestrial facilities 
in such a way as to optimize the 
advantages of each. We are anxious to 


proceed promptly with the implemen- 
tation of the first stage of such a 
domestic satellite system. Whether the 
system as it develops will be deployed 
in precisely the configuration we have 
proposed, I am not sure. Considering 
the pace of advance of today's tech- 
nology, it is a virtual certainty that new 
considerations will arise that will alter 
in some degree the economic balance 
between satellite and terrestrial facili- 
ties on which its design is based. Yet 
I believe that satellites will play an 
important role in the future domestic 
communications system In this 

What is important, however, is the 
principle on which our proposal to the 
Federal Communications Commission 
is predicated — the principle that satel- 
lites should be employed in domestic 
communications so as to provide their 
advantages to the benefit of all users 
of communications services. In addi- 
tion to cost, the need to assure reli- 
ability through diversity and the im- 
portance of conserving the resources 
of the frequency spectrum and the 
equatorial orbit path are other factors 
that must receive most careful con- 

We recognize that the way satellites 
may come to be used in domestic 
communications is not at issue in this 
hearing. As the Committee knows, the 
Federal Communications Commission 
is currently considering the whole 
question of satellite systems for 
domestic applications. Our proposal 
for an integrated multi-purpose satel- 
lite system is but one of several pro- 
posals submitted in the course of that 
proceeding; some of these proposals 
call for specialized systems for tele- 
vision distribution alone. Admittedly 
there remains considerable disagree- 
ment as to their relative merits. 
Searching analysis and systems engi- 
neering will be required to reach right 

answers on this matter. In our view, 
the decision will have far reaching 
consequences. For inevitably the 
establishment of specialized systems — 
by preempting satellite usage — would 
seriously delay, if it did not altogether 
preclude, the economies of scale and 
the reliability of service that would 
flow to the general public from a 
multi-purpose system serving all users. 

But — and this is my third point — 
public television need not wait for 
domestic satellites. S. 1160 does not 
hinge on the use of satellites — or, for 
that matter, any particular mode of 
transmission. Satellites are relevant to 
public television only to the extent 
that they may provide more econom- 
ical interconnection. As I have indi- 
cated, we believe that satellites can 
and will play an important role in this 
regard. But the establishment of any 
satellite system to meet the reasonable 
needs of ETV can, at best, take several 

Fortunately, however, the means of 
interconnection for public television 
are available now. As I said at the out- 
set, we in the Bell System are ready 
to do everything we properly can to 
provide services that match the needs 
and resources of public television. As 
an earnest of this intent, we last week 
filed with the Federal Communica- 
tions Commission a tariff which will 
permit us, on a trial basis, to offer TV 
transmission service between 2 a.m. 
and 12 noon at about half of current 
rates. While this tariff is available to 
all our customers for program trans- 
mission service, it is designed to meet 
what, on the basis of our reading of 
the Carnegie Commission's report, 
appears to be one of public tele- 
vision's basic needs: an economical 
means of transmitting program tapes 
during off-peak hours for later broad- 
cast at times of the local station's own 
choosing. I am hopeful that the ETV 

broadcasters will soon make effective 
use of this new service. 

But we shall not wait upon the con- 
clusion of this experiment to consult 
with authorities in the field of educa- 
tional broadcasting. These consulta- 
tions are going on right now with the 
aim of developing further offerings 
tailored to their needs. 

In this connection, we note that 
Section 396(h) of the bill provides that 
nothing in the Communications Act of 
1934 shall be construed as preventing 
the common carriers from offering 
"free or reduced rate communications 
interconnection services" for ETV. I do 
not believe that I need belabor the 
point that there is nothing "free" that 
somebody doesn't have to pay for. 
And it will be equally apparent that 
"reduced" rates for ETV have implica- 
tions which relate to other users of like 
and other services. However, the 
enactment of this section of the bill 
would reflect a policy that public TV 
should receive interconnection serv- 
ices at the lowest feasible cost. Let me 
say that we are not unsympathetic to 
this objective and we share the in- 
terest in developing a sound basis for 
supporting ETV in this regard. We shall 
certainly continue to search for ways 
by which we may come up with inter- 
connection rates to the advantage of 
this medium. Necessarily — and prop- 
erly — any such proposals will require 
the concurrence of the Federal Com- 
munications Commission. 

I am sure that you will understand 
that I cannot be more definite on this 
point until the specific needs of public 
TV are more clearly delineated. You 
may be sure that we will work closely 
with the Corporation for Public Tele- 
vision, when it is established, and with 
the Federal Communications Commis- 
sion to reach the best solutions pos- 
sible in the light of the specific re- 
quirements of ETV as they emerge. D 


Bridging the Gap 

Rapid advances in the communications 

arts— like the development of 

integrated circuits— call for 

ever closer coordination between 

research and development 
and engineering for manufacture 

When Mrs. Betty Wolf goes to work at Western 
Electric's Allentown, Pa. Works, she isn't entirely sure 
she'll still have the job she left the day before. Not 
that she's afraid of losing her job; it's just that Mrs. 
Wolf works on the Pilot Line, where today, products 
of the new technology — integrated circuits — are 
being proved in. And individual tasks on the Pilot Line 
can change just that fast. 

Mrs. Wolf, who has been with Western Electric for 
over 16 years — and incidentally is a very youthful 
grandmother — likes dealing with new things and 
new ideas, and learning new skills her job requires. 

"We really get the brunt of change here," she says. 
"Sometimes we just get started on a new process or 
product when, Zing! Somebody changes it or takes it 
back to start all over. Then we start all over." 

When somebody "takes it back," it goes to the 
Design Capability Line, known with affectionate brev- 
ity as the DCL. Although located right in the middle 
of one of the manufacturing areas in the Bell Sys- 
tem plant, and surrounded by the bustle and noise 
of electronic component production, it is operated 
by Bell Telephone Laboratories. There, on what West- 
ern Electric development engineer Robert Whitner 
calls "our solid ground between design and product," 
manufacturing engineers work side by side with 

New technology demands new manufacturing methods: 

"We don't stamp out metal parts now -we make 

precision photo masks for integrated circuits." 


members of Bell Laboratories' technical staff. 

"Our job is to determine if the design of a new 
device will be amenable to manufacture," says Mr. 
Whitner. "Then we send specific suggestions for 
manufacturing methods to the Pilot Line. The engi- 
neers in the Pilot Line develop the ideas, design and 
develop the production equipment, and debug it." 

Kermit Kalna, department chief. Bell Integrated 
Circuits, oversees the operation of the Pilot Line and 
the DCL. Running a lean hand through a shock of 
white hair, he says, "This pilot operation isn't a pro- 
duction line, but sometimes it looks like it. We're 
the man in the middle. In a very real sense, we live 
in both worlds — design and manufacture. We have 
to prove in the design, how to make it, how to test 
it, how to maintain standards. When it leaves here, 
it's ready for production, and it should never have to 
come back. It's our job to see that it never does." 

The interaction of Western Electric with Bell Labo- 
ratories—the Bell System's manufacturing and supply 
unit and its research branch — isn't new; the two 
have long worked closely together to translate con- 
cept into product. But the extent and the timing of 
this cooperation in the process of producing new 
tools of communications is quite different today from 
what it was only a few years ago. 

"Back in the electromechanical era," is the way 
Dr. Morris Tanenbaum describes it. As Director of 
Research and Development at Western Electric's Engi- 
neering Research Center in Princeton, N.J., Dr. Tan- 
enbaum looks both back and forward at Western's 
position in engineering for manufacture. 

"A few years ago, areas of responsibility were fairly 
sharply defined," he says. "The manufacturing proc- 
ess didn't change quickly or radically. But now, in 
the electronic era, research and manufacturing have 
to be more closely interlinked. We're dealing with 
new materials, new techniques, new degrees of pre- 
cision. And this has led to a basic change in Bell Sys- 
tem organization: The organization has had to adapt 
to its technology, instead of making technology adapt 

to organization, so manufacturing developments can 
parallel design developments." 

A. E. Anderson, Engineering Director at Western's 
Allentown Works, considers that this basic change — 
the establishment of regional laboratories in Western 
manufacturing locations — is a vitally important link 
between design and production. 

"It's necessary," he says, "to reach a level of com- 
mon understanding, common language, between the 
inventors, often working in pure science, and the 
manufacturers working with the tools of production. 
These regional laboratories have effectively pushed 
back the interface to points nearer and nearer the 
genesis of the idea. We must interact with the Labo- j 
ratories at the exploratory design stage, sometimes I 
even in discussion of the idea itself." 

The transistor is a case in point. First commercially 
produced at Allentown, this tiny device that revolu- 
tionized electronics also revolutionized manufactur- 
ing processes. 

"We sat down with Laboratories people," says 
Mr. Anderson, "long before they were ready to ask 
us to make the transistor in quantities. We had to. 
We were going to have to handle materials we'd 
never used before — at first germanium, then later 
silicon. We had to know purity standards, tolerances, 
operating requirements. And we had to project this 
new technology in terms of people and the tools they 
would use. If we hadn't been able to work with Bell 
Laboratories in the early stages, we'd have been lost 
before we started. Since the technology is evolu- 
tionary and is always changing, our early interaction 
with the Laboratories is a never-ending affair; in 
fact, it is growing as it must as designs and technology 
become ever more complex." 

While the regional laboratories, now in nine West- 
ern Electric locations, have brought design and man- 
ufacture together under the same roof, they were 
augmented some time ago by a still closer link in 
the Laboratories-Western relationship. 

"Back in '50's," says Dr. Tanenbaum, "we began 


It takes new materials. - sometimes home-grown - new tools, new skills to make today's 

new products. High-purity silicon crystals, grown in WE's Allentown Works, upper picture, 

provide raw material for integrated circuits. In lower pictures, Terri Kukitz, left, 

is the only one who operates pilot model of machine, bonding 16 leads at once 

on new beam lead integrated circuits. Marie Dalmaso, right, had to learn exacting skill 

in matching microscopic photo masks to silicon slices cut from crystals shown above. 


Increasing complexity of new products - integrated circuits — makes testing process 

more complicated and difficult. Mrs. Laura Charles, left, works on pilot testing of new 

circuits tor Touchi Tone® Tr;ni//ne® p/ione. At right, Mrs. Betty Wolf and WE development engineer 

Stanley Hause do computvn.'i 1/ h-.iing and fault evaluation of these products of new technology. 

to realize that the regional laboratories concept, 
good as it was, could be greatly strengthened. An 
even earlier interaction with the designer could play 
a major role in coping with the advancing technol- 
ogy. Then the design of the product and the way to 
make it could evolve together from the earliest con- 
cept. This led to another innovation in Bell System 
organization — the establishment of Western's 
Engineering Research Center, which meshes still 
more closely design development and manufacturing 
process development." 

Dr. Tanenbaum remembers the advent of tantalum 
thin film technology, one of the newer branches of 
the solid state electronics family. Basically this con- 
sists of depositing an extremely thin film of tantalum 
on glass or ceramic plates, then modifying it to pro- 
duce high quality resistors and capacitors. 

"Early in the exploratory design stage. Bell Labora- 
tories asked us to explore the manufacturing process 
this new product would require. This was well before 
design was complete and a few years before produc- 
tion could even be considered. The process had to 
operate in a precisely controlled partial vacuum, and 

it had to be continuous for volume production. 

"We came up with a process that moved the plates 
continuously through a series of vacuum chambers 
and a controlled atmosphere of argon and nitrogen, 
where electric 'sputtering' deposited the film. 

"Developing this took several years of close col- 
laboration between WE's process research engineers 
and Bell Laboratories' exploratory design engineers. 
By the time the design was ready, we had the new 
manufacturing process ready." 

Such innovations in products place heavy demands 
on manufacturing know-how. As Mr. Anderson says, 
"The more radical the innovation, the more difficult 
the transition from theory to product." 

"We're old hands here by now at making transis- 
tors, for instance. But as the technology has changed, 
the transistor itself has changed. As it has had to 
work at higher and higher frequencies, so have crit- 
ical dimensions shrunk in size. Now we make several 
thousand on a slice of silicon just over an inch in 
diameter. You can hardly see the separate transistors 
— they're about the size of a grain of black pepper — 
and just about as hard to get hold of and handle, too. 


Allentown production line turns out integrated circuits for 

electronic switching systems. Behind this manufacturing process lie many 

months of experiment, development and close cooperation 

between Bell Laboratories and Western Electric. 

Getting them into manufacture meant inventing and 
designing new tools — vacuum needles, superpre- 
cision lead-bonders (or welders), micromanipulators 
— and providing microscopes so the girls can see 
what they're doing. It also meant training girls to use 
these new tools. 

"With transistors and now, especially, with inte- 
grated circuits, the manufacturing process is not only 
more sophisticated than with traditional things like 
relays or switches — it's entirely different. We're 
working with tolerances about the size of a virus." 

Having been on the crest of the breaking wave of 
new technology for years, Mr. Anderson appreci- 
ates the adaptability of people. So does Joseph 
Santangini, development engineer on the Pilot Line. 

"We're the proving ground for new processes and 
we have to do some human engineering, too." 

The jelling of a new design into a firm production 
process involves developing processes, controls and 
facilities that production line people can cope with. 
It's the job of the Pilot Line to explore and develop 
suitable ways of doing this. The exploring — trying, 
testing, discarding, trying again — by its very nature 
entails change. The new technology — integrated 
circuits, for example — is based on transistor tech- 
nology, but involves many new techniques. 

Richard Corazza, in charge of integrated circuit 
assembly and testing in the pilot section, says, "You 
get used to testing under microscopes with three 
probes — we've been doing that with transistors. Now 
we're using anywhere from 9 to 16, and there are new 
circuits with 18 to 20 on the way. It makes the testing 
job that much more complex. It also makes it that 
much more difficult to develop a working production 
line process. The more complicated and delicate 
these things get, the bigger our job is. With whole 
circuits, you're speaking a different language." 

With new designs arriving from the DCL at today's 
accelerating pace, Mr. Santangini's "human engineer- 
ing" is important. "People here enjoy working with 
new things," he points out. "They can't be bothered 


Working interface between Bell Laboratories and WE: on the design capability line at Allentown 

— the step between design and pilot line — Western development engineer Robert Whitner, left, 

and Bell Laboratories' Paul Perron determine if newly designed products will be amenable to manufacture. 

"Today it's beam lead integrated circuits," says Mr. Perron. "Tomorrow it may be something else, 

requiring different materials, different methods and equipment. Whatever it is, 

it will require continuous coordination between research and manufacturing." 


by change. They thrive on it. That's one reason they're 
here. When a new product gets through the course 
here, the production process has been broken down 
into separate operations that can be learned and 
handled efficiently by the operators on the line." 

Says Mr. Anderson, "My idea of real sophistica- 
tion in a manufacturing process is simplicity. One 
good example is our introduction of the vibrating 
jig. This is a small, bench-mounted machine, essen- 
tially very simple, that enables the girls to handle 
tiny piece parts and prepare them for mounting, 
hundreds at a time. The jig simply vibrates them 
uniformly into tiny holes in a plate, like bees return- 
ing dutifully to the honeycomb. Then they can be 
stacked up in jigs all at once for bonding, instead 
of individually. Many operations, though, have to be 
done individually, and here is where human judg- 
ment and skill come in. 

"It is common, in fact pretty general, to view effi- 
cient manufacture as highly mechanized or, even 
more popularly, as automated. This is probably the 
right solution for some problems and may be the only 
solution in many cases. 

"The machine is specialized and therefore highly 
inflexible. In our fast-changing and developing field 
it is very easy to find designs and technology chang- 
ing faster than machines can be designed, built and 
proven in. When this happens, the inflexible machine 
becomes a 'boat anchor.' For our kind of business, 
at least, you have to think long and hard before you 
try to compete with the tactile sensitivity of the 
human hand, the sensing capability of the eyeball, 
and the judging, directing and controlling capabil- 
ities of the mind. People are the most flexible, most 
versatile means we have of assembling or making 
things. With patience, people can be taught to do 
many things, but it is pretty tough to teach a machine 
to do something it was not designed to do. 

"What we get out of this is a blend of people and 
machine, with each doing what it can do best. We 
adapt machine to people, never vice versa. Above all. 

we try to keep it simple. The lead-bonding operation 
in silicon transistors is a good example. Here we bond 
a gold wire, so thin you can't even see it, to contacts 
on the transistor — also so small you can't see them. 
This is all microscope work. The bond or weld must 
be done just so, to meet requirements and to be reli- 
able. The girls on the production line orient, adjust, 
and carry out the several necessary motions. 

"We might make a machine that would have sens- 
ing and motion patterns, but not so simply. The girls 
can see if they have a good bond, they can see and 
l<now if there is a jam-up. We haven't yet devised a 
machine with that kind of delicate judgment. 

"On the other hand, the pressures and tempera- 
tures in the actual bonding operations are critical, 
and are far more easily controlled by built-in me- 
chanical features. This blend, or integration, of girl 
and machine came out of much study and develop- 
ment on the DCL and Pilot Line. We may find im- 
proved tooling and improved blending with people, 
but I doubt very much that any machine by itself 
will provide a better solution to our present produc- 
tion problems in terms of simplicity and flexibility." 

The future, even for men like Mr. Anderson, is 
sometimes a little difficult to see into. "I hardly dare 
think," he says with a sigh, "what's coming next — 
but, man, 1 can hardly wait." The only certain thing 
about it is that the things Western Electric makes 
for the Bell System will continue to change. 

New needs breed new technology. And as the new 
technology is born on the physicist's blackboard, on 
scratch pads, in long hours of talk, the bridge that 
has been built between the scientist-designer and 
the engineer-maker more and more will close the 
gap between idea and reality. 

"If we didn't have this working interface with our 
inventors and designers," says Mr. Anderson, "we'd 
still be making buggy whips in the jet age. We can't 
afford to do that. Our job is not just to keep up but 
to keep ahead. I think we've devised the best means 
there is for us to accomplish the mission." D 




Overseas Facilities Expanded 

AT&T is continuing to expand and 
improve its network of radio, cable, 
and satellite facilities to meet the 
growing demand for overseas tele- 
phone service. 

With calls between the U.S. and 
overseas points increasing at a rate of 
better than 20 percent a year, AT&T 
has in recent weeks added new radio- 
telephone facilities linking South 
America, acquired 80 circuits in a new 
Pacific underseas cable, and leased 
additional channels in communica- 
tions satellites serving European and 
Pacific points. 

Plans for a new overseas operating 
center in Pittsburgh were also 
announced. The center, which is 
expected to be in operation in 1970, 
will handle calls to and from Europe 
that originate or terminate west of 
Pittsburgh. The Pittsburgh overseas 
office will join other "gateway" cen- 
ters now operating in New York City, 
White Plains, N.Y., Oakland, Calif., 
and Miami, Fla. (The Miami center will 
be moved to Jacksonville, Fla., next 
year.) Approximately half of all over- 
seas telephone calls — including all 
calls to and from Europe — are chan- 
neled through these centers. The other 
half are dialed directly by regular long 
distance operators or, in the case of 
some calls to Canada and to certain 
Caribbean points, by the callers them- 

While the number of overseas calls 
keep increasing, the cost of calling is 
steadily declining. The latest in a 
series of rate reductions lowered the 
cost of calls between the U.S. main- 
land and Hawaii. As a result of this 
and other recent overseas rate revi- 
sions, U.S. customers are now realiz- 

ing annual savings of more than $11 
million annually. 

The increased use of satellite cir- 
cuits has been a factor in several of 
the rate reductions. The largest com- 
mercial user of communications sat- 
ellites, AT&T is now leasing 108 cir- 
cuits in the Communications Satellite 
Corporation's Atlantic and Pacific 

New TV Camera Tube Developed 

A new television camera tube that is 
more sensitive, longer lasting, and 
more reliable than presently available 
camera tubes has been developed at 
Bell Telephone Laboratories. 

The new tube was designed for pos- 
sible use in future models of the Pic- 
turephone* visual telephone but may, 
with further development, also find 
application in portable and color tele- 
vision cameras. 

By combining the best features of 
the vidicon tube with the highly de- 
veloped silicon technology used in 
integrated circuits. Bell Labs was able 
to overcome certain shortcomings of 
present camera tubes. A major advan- 
tage of the new tube, as far as the 

'Service mark of the Bell System 


Picturephone* set is concerned, is its 
extreme sensitivity. (The greater the 
sensitivity of a camera tube, the less 
illumination is required for the object 
or scene being televised.) Because the 
Picturephone* set is designed to be 
used in homes, offices, and other 
locations with no special lighting, a 
camera tube was needed that would 
perform well with normal lighting. 

The new tube is the same size as 
the vidicon tubes now in use, and 
should have a comparable manufac- 
turing cost. 

Data Processing Center Planned 

To meet the need for additional space 
to handle its growing activity in the 
data and computer fields, AT&T is 
building a data processing and com- 
puter center in New Jersey. 

The facility, which will be known 
as the Raritan River Center, will be 
located near the New Brunswick 
campus of Rutgers University, about 
40 miles from New York City. 

In addition to needing more space 
for computer equipment, AT&T also 
feels that data processing and com- 
puter operations can best be 
conducted in a building expressly 
designed for this purpose. The center 
will initially house some 300 to 400 
people who will handle computer and 
data processing activities for the com- 
pany's Treasury Department. It also 
will provide facilities for some divi- 
sions of the Business Information Sys- 
tems Programs Department, a new 
organization which is responsible for 
planning and implementing Bell Sys- 
tem data processing and computer 

The Raritan River Center will have 

direct communications links (includ- 
ing computer access) with other 
Treasury facilities concerned with data 
processing and computer work. 

Trimline Goes To Moscow 

The Bell System's Touch-Tone® Trim- 
line® telephone was one of 821 items 
included in the exhibit, "Industrial 
Design — USA," which was shown in 
major Russian cities this spring. 

The exhibit, produced by the U.S. 
Information Agency as part of the U.S.- 
U.S.S.R. cultural exchange program, 
depicted the role of American indus- 
trial designers in planning and pro- 
ducing industrial products. A total of 
179 American firms was represented. 

More than a half a million Russians 
saw the exhibit when it appeared in 
Moscow, Leningrad and Kiev. 

Bonding With Infrared Energy 

A new technique that makes it possi- 
ble to bond simultaneously large num- 
bers of flexible cables to printed cir- 
cuits or to other cables has been de- 
veloped jointly by Bell Labs and West- 
ern Electric's Engineering Research 
Center at Princeton, New Jersey. 

By using focused infrared energy to 
solder the cable, the new technique 
provides a quick, easy and inexpen- 
sive method of interconnecting circuit 
boards such as those containing min- 
iaturized solid state components used 
in computers and communications 

Until now, connecting flexible cable 
required complicated preparation and 
each conductor had to be soldered 
individually. With the new process, 
fifty or more connections can be made 
in 10 seconds. 

A. p. Boyer of Bell Labs inspects new infrared soldering device as it bonds flexible cable to 
printed circuit board. With this process, 50 or more connections can be made simultaneously. 


A Seller'": Market 

Some 45,000 companies, most of them 
small businesses with less than 500 
employees, sold more than $1.6 bil- 
lion in goods and services to the Bell 
System last year. 

The sales were made to Western 
Electric, which acts as the purchasing 
agent for Bell companies. Purchases 
were made from suppliers in all 50 
states and in 21 foreign countries and 
territories. In the U.S., the purchases 
were spread over some 4,000 com- 

Copper was again the major raw 
material purchased — $130 million 
worth — while telephone directories 
were the principal supply item bought 
by Western. The total bill for the latter 
came to more than $90 million. 

Laser "Knife" Developed 

A new "light knife" which allows sur- 
geons to use the focused beam of a 
laser as easily as they would a scalpel 
has been developed by Bell Labs. De- 
signed to help the medical profession 
evaluate laser surgery, the new device 
guides the laser beam through a hol- 
low, jointed arm to a small probe 
which is held like a scalpel. The probe 
is about the size of a fountain pen 
and can be moved easily in any direc- 
tion by the surgeon. It may also be 
attached to a surgical microscope for 
more delicate operations. 

Until now, laser devices used in 
medical experiments required flexibly 
mounted spherical mirrors or fiber 
optic systems to transmit the laser 
beam to the patient and did not pro- 
vide much freedom of movement. 

The "light knife" can be used with 
both pulsed and continuous wave 

lasers and may be useful for cutting 
a wide variety of materials besides its 
application in the developing field of 
laser surgery. 

Bell Labs has been providing the 
medical profession with technical 
assistance on lasers because of its in- 
terest in learning about the effects of 
lasers — a potential communications 
media — on living tissue. 

Bell System Assists job Program 

Bell System information operators will 
be supplying a different type of infor- 
mation this summer. In cooperation 
with the President's Council on Youth 
Opportunity, information operators 
will assist in a nationwide program to 
find summer jobs for young people. 

The President's Council launched 
an advertising campaign in May which 
asks that anyone who can offer em- 
ployment to young people call an in- 
formation operator and ask for "Sum- 
mer Youth." The operator will then 
refer the caller to the local coordinat- 
ing agency which may be a United 
Fund or Community Chest-type or- 
ganization, a Mayor's Youth Oppor- 
tunity Council, or a local community 
action agency established by the U.S. 
Office of Economic Opportunity. 

The Bell System was asked to lend 
its assistance to the "Summer Youth" 
program by Vice President Hubert H. 
Humphrey, chairman of the Presi- 
dent's Council, who said he is seeking 
the "widest possible teamwork" by 
both individual citizens and organiza- 
tions in the effort to find jobs for 
young people. AT&T Board Chairman 
H. I. Romnes advised Mr. Humphrey 
that the Bell Companies would "coop- 
erate in every practical way." 

Models Simulate Nerve Cells 

Man may never completely under- 
stand all the workings of the human 
brain, but Bell Laboratories' Leon 
Harmon is using electronic models of 
nerve cells to help improve our knowl- 
edge of the nervous system. 

A member of the Information Proc- 
essing Research Department at Mur- 
ray Hill, N.J., Harmon has been 
working with neural models, or neuro- 
mimes, which are electronic circuits 
that simulate the functions of living 
nerve cells. Bell Labs is interested in 
learning more about the nervous sys- 
tem because, as one of the most effi- 
cient communications systems in 
existence, it might provide knowledge 
that could be applied to man-made 

Concentrating on eye and ear 
nerves, Harmon uses the models to 
make predictions which can then be 
checked by neurophysiological exper- 
iments. For example, Harmon ob- 
served some curious relationships 
between stimulus and response fre- 
quencies in the model's electrical cir- 
cuit. Some of these phenomena were 
later found by physiologists to dupli- 
cate the signals in nerves that control 
the wing beats of insects in flight. 

In recent work, Harmon and his 
colleagues stimulated several neuro- 
mimes that were interconnected as 
in a biological system. They found that 
the complicated patterns in the indi- 
vidual electrical units are generated 
— not because of the stimulus — but 
because of the type of connection. 
How and why these patterns appear, 
how to predict them, and how to re- 
late them to patterns seen in biological 
systems is the goal of their current 
investigation. D 


Taking Stock of Share Owners 

Share owner relations have become more than an annual report 

or a proxy statement. AT&T is also listening carefully 

to what the owners of the business have to say. 

"You sure you want to talk to me?," a Cleveland, 
Ohio resident said recently when he received a 
telephone call from a manager at the Ohio Bell 
Telephone Company. "After all, I only own five 
shares of AT&T." 

The caller assured the share owner that he did 
indeed want to come out and visit him and that the 
amount of stock he owned didn't matter. (In fact, 
until the information was volunteered, the caller had 
no idea how much stock the share owner had.) The 
reason of the visit, the manager explained, was to talk 
about the business and answer any questions the 
share owner might have. 

This year more than 100,000 AT&T share owners 
will have a chance to sit down with a Bell System 
management person and discuss the business in 
which they share ownership. The purpose of the 
visits is to strengthen the ties between the people who 
own AT&T and those who manage the business 
through mutual understanding — simply by talking 
informally about whatever subject the share owner 
might want to discuss. 

For some people, it may come as a revelation that 
a company with more than three million share owners 
would want to visit even the smallest of its share 
owners. But for many share owners, the visit may be 
the first opportunity they've had to talk to a repre- 
sentative of the company other than as a customer. 

The Bell System's Share Owner-Management Visit 
Program, as it's officially called, is probably the most 

extensive face-to-face share owner relations program 
of any major business. Like most companies, AT&T 
communicates with share owners in a variety of ways 
— through annual reports, proxy material, letters and 
booklets just to name a few. The share owner visit 
program, however, is the most extraordinary, and 
undoubtedly most effective, way the Bell System has 
of bringing the business closer to its owners. 

The management employees who visit share 
owners are not full-time professional interviewers. 
They're people like Gene Barkhurst, an Ohio Bell 
commercial supervisor in Cleveland, who, in addition 
to his regular job, spends one or more afternoons or 
evenings each month going to the homes or offices 
of share owners and spending a half hour or so 
discussing the telephone business. 

Like the 10,000 other share owner visitors cur- 
rently in the program, Mr. Barkhurst was carefully 
selected for the assignment. His "credentials" include 
a solid working knowledge of the business gained 
through nearly 20 years of telephone experience, 
much of it in public contact work. This — plus the fact 
that he enjoys talking to people ("My wife says I talk 
too much") — has proved to be a valuable asset when 
it comes to handling the free-wheeling, no-questions- 
barred type of discussion that characterizes a share 
owner visit. 

Obviously, the success of the visit lies in the ability 
of the employee to respond knowledgeably to 
the share owner's questions. When the visit pro- 
gram was started some 11 years ago, the visitor was 
more of a listener: he simply encouraged the share 


owner to talk and noted his opinions. Today, there is 
far more two-way discussion with the visitor fielding 
questions about company policies, positions and 
goals — the kinds of questions that formerly were 
referred to headquarters. The visitors can handle such 
questions because of careful advance preparation. 

Before he made his first visit, Mr. Barkhurst 
attended an intensive training workshop, much of 
which was devoted to taped practice visits with the 
trainees alternating in the roles of visitor and share 
owner. At the workshop. Gene and the others were 
briefed on various topics and told that, throughout 
their participation in the program, they could expect 
to receive a steady flow of bulletins and other back- 
ground information pertaining to subjects likely to 
come up during a visit. But there would be no fixed 
messages for him to memorize; he would be expected 
to use his own words. 

Although the visitor in talking to a share owner 
may bring up some specific subjects that the com- 
pany is specially interested in getting comments on, 
they try not to lead the discussion any more than 

"Generally, the share owner will soon get around 
to the things he wants to talk about," Mr. Barkhurst 
says. "One share owner, for instance — a science 
teacher — wanted to talk mostly about space com- 
munications. On another visit, we talked primarily 
about financial matters. The share owner obviously 
knew a lot about finance. In fact, she knew almost as 
much about the company's finances as I did. On still 
another visit, this time with a graduate student at Case 
Institute, the share owner kept coming back to 
employee benefits. It turned out that he had just had 
a job interview with Bell Labs." 

Although visitors try to answer all questions on the 
spot, there are times when it isn't possible. "If that 
happens, you make a commitment to get the answer 
and call back," Mr. Barkhurst explained. "The same 
holds true if the share owner has any service prob- 
lems, something we always ask about." 

The visits, of course, are not all business. Mr. 
Barkhurst estimates that about 50 percent of his 
discussions have been of a non-telephone nature. 
This is undoubtedly due in part to the fact that while 
the share owners to be visited are picked at random, 
they are assigned to visitors who live in the same 
general area, thus getting across the point that the 
business is managed by hometown people — in some 
instances, even neighbors. 

Keeping the visit relaxed and trying to avoid lead- 
ing the share owner to some preconceived notions 
held by the visitor is sometimes difficult. It may also 
have its pitfalls, as some visitors can attest. In one 
instance, the share owner was a 90-year-old grand- 
mother who started telling him about her grand- 
children. The visitor was there two hours without ever 
getting off the subject. "She was enjoying herself so 
much," he reported later, "I didn't have the heart to 
mention what 1 was there for." 

What the visitor is there for, of course, is to seek 
information: what's on the share owner's mind, what 
if anything is bothering him about the way the busi- 
ness is being run, is there anything he doesn't under- 
stand or wants more information about? The visits 
also provide an opportunity for the visitors to clarify 
company policies and activities and to try to erase 
misunderstandings or misconceptions about the 

After each visit, the visitor writes a summary on 
what was discussed. Significant excerpts from the 
reports are then sent to top management both at 
AT&T and the local operating company where they 
are carefully analyzed to determine the trend of 
share owner opinions. 

"Management is interested," says Kenneth G. 
Norton, share owner relations manager at AT&T, "in 
general impressions of the efficiency and attitudes of 
our employees, share owner reaction to our service, 
and of course, comments on financial matters such 
as earnings, dividends, stockmarket prices, capital 
structure and capital requirements. While no busi- 


ness can operate purely on a popularity basis, a recur- 
ring consensus for or against some policy or practice 
carries weight, especially when it coincides with 
comments we get from customers, employees or the 
general public. 

"Over the years we've noticed a great shifting of 
share owner interests and attitudes," adds Mr. 
Norton. "We've found that the visit program is very 
sensitive to changing share owner attitudes. For 
example, when the company was launching its Tel- 
star satellites, the interest in discussing satellite com- 
munications was intense. In nearly half the visits, 
share owners would ask questions about satellites. 
More recently we had a sizable drop in the market 
price of AT&T stock and that's what many share 
owners want to talk about. Of course, we're careful 
never to advise them on their investments." 

When the visit program began to take shape, 
Mr. Morton recalls, there was some concern 
about how share owners would react. The results have 
long since vindicated the decision to launch a contin- 
uing, long-term program. An overwhelming majority 
of share owners, Mr. Horton says, indicate that they 
appreciate the visit. Should a share owner say he does 
not want a visit — and a few do — it's dropped right 

To help keep the visit program on target, AT&T is 
continuously surveying share owners who have been 
visited to get their reactions. Of particular concern to 
the company is the share owner who says that he 
raised questions the visitor could not answer. To hold 
this to a minimum, the Bell Companies have ex- 
panded their training programs and stepped up the 
amount of background material for visitors. 

Having people with the ability to converse easily 
on company matters is important to the visit 
program, but Mr. Horton sees in the program a much 

broader application. "The telephone business 
touches most everyone and becomes more complex 
day by day," he says. "It needs explanation and, if the 
public understanding and support it must have is to 
be maintained, every management person worth his 
salt must be a competent spokesman." 

The development of spokesmen for the business 
has been one of the side benefits of the visit pro- 
gram. Certainly, for those who have gone through 
the program, it has proven its value. "It was the best 
thing that ever happened to me," says one visitor. 
"It forced me to learn more about the whole com- 
pany, not just my own job." 

As extensive as the share owner visit program is, 
broader means of communications must be used to 
reach the majority of share owners. It is here that the 
written rather than the spoken word comes heavily 
into play. 

Communication with an AT&T share owner begins 
with a welcoming letter from the chairman of the 
board. This goes out with an introductory booklet 
about the Bell System whenever an individual's name 
first appears on the stock list. He is then offered a 
range of booklets and brochures about the company 
and its policies. Annual reports and quarterly reports 
which accompany dividend checks, proxy material, 
and reports or share owner meetings are items of a 
recurring nature. In addition, of course, information 
in the press, which is sometimes based on news re- 
leases furnished by the company, is frequently 
oriented to share owner interests. 

However, there are well-defined problems in com- 
municating with mass audiences via the written word. 
Studies show that AT&T's mailings receive above- 
average readership, but none is read by all to whom 
it is sent. Comprehension is also a problem when 
the audience is composed of three million people. 
Recognizing this, AT&T is constantly looking for ways 
to make written communications more effective. 

"One of the things most companies are trying to 
do now is to pinpoint what their readers really want 


to know," says W. H. Riggs, assistant secretary of 
AT&T. "One of the nation's largest manufacturing 
companies, for example, used to tell its share owners 
all about its heavy industrial installations. Why not? 
Those were the big profit-makers for the share 
owners. But then they surveyed the readers and found 
out they didn't really want to know about big indus- 
trial equipment, after all. But they had a lot of interest 
in the household appliances the company made. 

"In the case of our own report, we used to — and 
still do — place a lot of stress on our people, and how 
they contribute to better service. Our thought was 
that because we are a service organization, that's 
what our share owners would be interested in. By and 
large we have been right. We have found, however, 
that readers today are even more interested in re- 
search and the forward-looking, growth aspects of 
the business. So our publications in the last two or 
three years have tended to emphasize these points." 

Despite all the information that AT&T sends out, 
there are bound to be lots of questions. This is 
reflected in the heavy volume of letters and telephone 
calls that AT&T receives. Each year more than 300,000 
letters and telephone calls are handled by AT&T's 
Treasury Department. Some 165 women bring the 
personal touch to this avalanche of inquiries which 
generally fall into certain categories. Some of the high 
volume matters concern the transfer of stock certifi- 
cates, questions about dividends (when, how much, 
why hasn't it arrived) and changes of address. There 
are special, extra volumes of inquiries prompted by a 
stock split, the announcement of a dividend increase 
or a rights offering. 

But, as might be expected with a large family of 
share owners such as AT&T has, the unusual is certain 
to crop up. A stockholder writes that the family dog 
has eaten the dividend check, and now what? An- 
other objects to small machine punctures that strike 
part of his name on the check, and wonders if it can 

be cashed. Still another writes to explain why she 
hasn't cashed her dividend check in the past few 
years: "There's no point in cashing them until I really 
need the money." 

Questions bearing on company policy are an- 
swered by the Secretary's Department. Each requires 
a special letter. These vary from five to ten thousand 
each year depending on circumstances. In addition, 
the secretary's office mails out some 16,000 booklets 
requested by share owners each year, mostly in re- 
sponse to the offer which goes out with the chair- 
man's welcome letter. 

With all of AT&T's share owner relations activities 
— letters, telephone calls, visits, printed materials and 
the annual meeting — Assistant Secretary Riggs esti- 
mates that about 20 million "contacts" are made each 
year between management and the owners of the 

These contacts have been broadened considerably 
over the years, but Mr. Riggs is the first to admit that 
there is room for improvement. 

"Share owner relations is far from an exact science 
and the future may hold more refinements than the 
recent past," he observes. "For example, our studies 
show that the great bulk of our owners feel they are 
getting about the right amount and type of informa- 
tion they need. But some say we give them too much. 
And others want more. The day may come, however, 
when we can isolate each group and tailor separate 
programs to their specific needs." 

Whatever changes are made, one thing will prob- 
ably remain the same. Share owners will place a par- 
ticularly high value on direct contacts with the man- 
agers of the business, whether it be in the form of a 
letter, a telephone call, or a personal visit. 

"I would expect the growing number of owners of 
industry to look on their managers with sharp eyes 
and demanding minds," AT&T Board Chairman H. I. 
Romnes said recently. It is what they perceive in their 
contacts with the business that will, in many respects, 
determine the future of business. D 



The headline you've just read is informationless. 
It tells you nothing you haven't already learned from 
looking at the picture. 

If someone tells you your ovi^n name, he again trans- 
mits no information : you already know it. He doesn't 
resolve any uncertainty for you. 

This idea— that whatever resolves uncertainty is 
information— was used by Dr. Claude E. Shannon 
during his years at Bell Telephone Laboratories to 
define and measure information for the first time in 
a way that was usable to scientists. Starting from 
such basic concepts, Shannon built a theory which has 
many applications to problems in communication and 
in other fields. In 1948, he published his classic paper, 
"A Mathematical Theory of Communication." 

Before this there was no universal way of measur- 
ing the complexities of messages or the capabilities of 

circuits to transmit them. Shannon gave us a mathe- 
matical way of making such measurements in terms of 
simple yes-or-no choices— conveniently represented by 
binar}' digits, which Dr. John W. Tukey of Bell Labs 
and Princeton University named "bits." 

As a result, we now have a benchmark. We know 
how much information a business machine, for ex- 
ample, can theoretically produce. We have a means 
for comparing this with the information of a telephone 
call or a television program. We have tools to help us 
design for high quality and high efficiency at the 
lowest possible cost. 

Shannon's quantitative measurement of information 
is not only invaluable to the Bell System but to scien- 
tists and engineers the world over. It is exciting much 
interest among psychologists and workers in other 
fields in which information handling is so vital. 


American Telephone and Telegraph Company 
195 Broadway, New York, N. Y., 10007 

Bulk Rate 
U.S. Postage 


Hartford, Conn. 
Permit No. 3766 

57-08698-M OL 15 



MO et^ioe 

Printed in U.j.A. 

July/August 1967 


telephone magazine 

^ .4 



telephone magazine 


Leighlon C. Gilman, Editor 

Donald R. Woodford, Managing Editor 

Al Catalano, Art Director 

Edwin F. NIeder, Richard R. Draper, 
Harold N. Schott, )r.. Assistant Editors 

H. I. Romnes, Chairman of the Board 
Ben S. Gilmer, President 
John D. deButts, Vice Chairman 
Charles E. Wampler, Secretary 
John J. Scanlon, Treasurer 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

Peering througli (anned-oul ends of cable conductor; is Virgil lohanncs, an 
engineer at Bell Telephone Laboratories' digital transmission laboratory in 
Holmdel, New Jersey. Mr. Johannes is in charge of testing repeaters for a new, 
high-speed transmission system that carries voice, data, facsimile and Picture- 
phone signals as a stream of binary digits or "bits." See page 20. 


The View from Within 2 observations of the workings of the federal government 

from the view of a White House Fellow. 

Technology's Great Need: „ Growth in the number of technical papers has created an unprecedented 

Information Retrieval need for information storage and retrieval. 

Looking into Learning 12 ^^^avioral scientists are looking into the learning process in an effort 
^ to develop a "technology of instruction." 

Bell Forum 18 The Bell System speaks out on corporate responsib. 


The Code's the Thine 2fl ^^^^^ ''"'^'^ modulation techniques make it possible to handle 
° the rapidly increasing volume of communications. 

The Affair of the ^^ ^ 

r • ■■ I .. ^O One man's reaction to the increasing volume of paper work. 

Spindled Manager 

Bell Reports 30 a summary of significant developments in communications. 


Dr. Walter (Wally) Baer is a 29-ii 
Bell Telephone Laboratories ph;i 
who, last September, took tem|( 
leave of the world of science ai 
business to join the executive hi 
of the federal government. Alo; 
17 other gifted and highly moti I 
young people, Dr. Baer is takin i 
in an imaginative new program 
called the White House Fellow: 

Designed to give a few outstani^ 
young (ages 23-35) men and wc 
firsthand, high-level experiencd 
federal government, the White i 
Fellows program thrusts the sel 
few into positions where they t* 
observe and participate in the ii 
workings of government. Durini 
year in Washington, Wally Baer 
serving on the staff of Vice Pres 
Hubert Humphrey. Other Fellc 
working as assistants to White h 
staff members, cabinet secretan 
United Nations Ambassador Cc 

The duties of a White House Fe 
are challenging and far-ranging 
Fellows help coordinate major | 
and develop new ones, conduc 
research and suggest alternate v 
carr>'ing out federal responsibil 
write speeches and reports, revi 
and suggest new legislation, suf 
staff work, chair meetings, answ 
congressional inquiries, and otf 
assist key government officials \ 
their daily work. Their real 
contribution, however, is the vi 
energy, and healthy spirit of inc 
that they bring to government. 

While being selected for the Wl 
House Fellows program is a cov 
honor (nearly 4,000 applied in t 
two years of the program but or 
won fellowships), it also require 
most cases, some personal sacri 
The hours are long, the pay in n 
instances less than they were m 
on the outside, and the work lo 
staggering. But at the same time 
rewards can be great, particular 
Ihe sense of accomplishment th 
comes from contributing towan 
•.olution of important national 
problems. This is the story of he 
White House Fellow views his 
year at the top. 

The View from Within 

by Wally Baer 

Time is something you become very conscious of 
in Washington. There never seems to be enough of 
it. With so much going on and a crisis seeming to 
come up every minute, the top people here lead an 
exceedingly hectic life. 

You sometimes wonder how men like Secretary 
Rusk and Secretary McNamara have been able to 
keep up the killing pace for seven years. Working 
with such people, one almost becomes a believer in 
what Jack Valenti calls the "extra glands" that he has 
attributed to President Johnson. 

But if an outsider finds life in government to be 
more demanding than expected, it's not the only mis- 
conception that is likely to be dispelled once you've 
spent some time here. Most of the White House 
Fellows agree their year as a working member of the 
executive branch is an "eye-opening" experience. 
That, of course, is one of the primary reasons for the 
Fellows program. It gives people from the outside a 
chance to see what really goes on within government. 
Richard Neustadt of Harvard calls this "sensitizing 
one's fingertips," and I certainly have to say that there 
is no comparison between my present understanding 
of what happens within the federal government and 
what I knew before 1 came here. 

Most of our conceptions of government, I've con- 
concluded, are really caricatures. For example, I ap- 
proached my assignment to the Vice President's staff 
with some uncertainty as to what the Vice President's 
role actually was. Perhaps that is the result of hearing 
too many jokes about what the Vice President does 
or doesn't do. 

What I found, however, is that despite the absence 
of constitutional or statutory mandates, the Vice 
President plays an important innovative role — I 
would say as a gadfly to the bureaucracy. More and 
more, the problems that government faces go be- 
yond narrow agency or department lines, and it fre- 
quently becomes the Vice President's task to bring 
together various groups on an ad hoc basis to work 
on specific problems. As chairman of the President's 
Council on Youth Opportunity — to take a specific 
example — Vice President Humphrey has the respon- 
sibility to see that meaningful programs are carried 
out throughout the country. To do this, he had to 
coordinate the efforts of a number of departments 
and agencies including the manpower training pro- 
grams of the Labor Department, many of the anti- 
poverty efforts of the Office of Economic Opportu- 
nity, and a number of the educational functions of 
the Department of Health, Education, and Welfare. 

To anyone not familiar with the federal bureau- 
cracy, this may sound simple enough. But 1 assure 
you, it isn't. Government agencies jealously guard 
their prerogatives and powers to the point where it 
sometimes becomes extremely difficult to get action 
on administration proposals and directives. I'm re- 
minded of something President Truman reportedly 
said when General Eisenhower was elected. "Poor 
Ike," he commented. "He's going to sit at that desk 
and give an order and then six weeks later, wonder 
why nothing has happened." 

To some extent, this is the nature of a bureaucratic 
system — ponderous, slow moving, set in its ways. 

But, you also soon come to realize that federal agen- 
cies are under tremendous pressure from all sides. 
As a result, some are as responsive to the Congress 
or to a particular outside interest or lobby as they are 
to the President. I'm reminded of my first course in 
physics which included an analysis of force diagrams 
that show how various forces moving in different 
directions affect a particular object. The forces at 
work in government are analogous. An agency may 
be moving in a certain direction, but all the time it's 
subject to many countervailing forces or pressures. 
The job of the federal executive is to see that his 
department is in dynamic rather than static equili- 

One of the most difficult tasks in government is to 
have an agency articulate meaningful goals for itself. 
Every administration has had to cope with this prob- 
lem, but the program budgeting system that Presi- 
dent Johnson has introduced is an important step 
forward. Program budgeting is the system employed 
in the Defense Department by Secretary McNamara 
and the people he brought in from business. In effect, 
it's the system analysis approach that many busi- 
nesses, including the Bell System, have used with 
great success. 

What the Defense Department did was to stop 
stating objectives in terms of so many wings in the 
Air Force or so many ships in the Navy and instead 
look at the purposes for which these forces were in- 
tended. One could then talk meaningfully about al- 
ternatives toward reaching the objectives. 

This type of goal setting is now being brought over 
into the civilian area. About a year ago. President 
Johnson put into effect an executive order which 
requires each federal agency to go through this same 

His duties as a While House Fellow keep Wally Baer on the move 
and may take him from the Vice President's ollice (top left) to a 
meeting with Thomas W. Can, director ol the Fellows program 
(lower left) or to a briefing session on some phase of the space pro- 
gram (far right). Among bis duties, Dr. Baer has helped interpret 
the possibilities ol applying technology to public needs such as low- 
income housing. 

kind of exercise to define its mission. Thus far, the 
idea has run into resistance because many agencies 
are used to doing what they've always done whether 
it's relevant or not. There has also been a good deal 
of resistance from Congress. Some Congressmen, 
particularly senior members who may be committee 
or subcommittee chairmen, feel it will disrupt their 
relationships with agencies that have been estab- 
lished through the years. This may well be; but re- 
arranging government programs along the lines of 
national objectives is something that has to come, 
and one can only hope it will come sooner rather 
than later. 

As a member of the Vice President's staff, I've been 
in a position to see a good deal of the interplay that 

goes into the formulation of national goals. My first 
assignment, in fact, was working with the newly or- 
ganized Council on Marine Resources and Engineer- 
ing Development, chaired by the Vice President and 
composed of the secretaries of the different depart- 
ments involved with oceanography. The Council's 
task was to merge the many separate and rather dis- 
parate agency activities into broad national programs. 
It has, I think, achieved a remarkable record in its 
first year of operation. 

Along with this emphasis on setting meaningful 
goals, we're also seeing more political agreement on 
the necessary role of the federal government. For 
years, we debated how deeply government should 
get involved in some of the basic national problems 
such as education, social matters and the like. We 
now pretty much recognize that the problems are so 
great that everyone's help — including the federal 
government's — is needed. The big question is what 
can the people in Washington do, working with state 
and local governments, with businesses, and with 
other segments of the society, to improve the quality 
of our national programs? 

This is one area where business can and must 
play a bigger role. We hear a lot of talk these days 
about the social responsibilities of business, but are 
business leaders really thinking big enough? We are 
already calling on business to help solve such broad 
problems as transportation, pollution, and rehabili- 
tation of housing. Soon we may even see private cor- 
porations running schools, administering hospitals 
or otherwise providing public goods and services that 
traditionally have been left to public enterprise. We 
have only to look at the space program to see how 
business and industry can make an outstanding con- 
tribution to national objectives. There are many areas 
where business managerial talent, and particularly 
the ability to deal with large and very complex sys- 
tems, would be of fundamental value in seeking solu- 
tions to national problems. 

The talents of business are being tapped to some 

extent on advisory councils and task forces. Currently 
active in advisory capacities are men like Frederick 
R. Kappel, retired AT&T board chairman, who is 
heading up the task force looking into Post Office 
Department re-organization, James B. Fisk and 
William O. Baker of Bell Labs, who are serving in 
scientific advisory roles, and Paul A. Gorman of 
Western Electric, who is on the Defense Industry 
Advisory Committee. 

It is no secret that President Johnson has relied 
heavily on task forces, made up of the best qualified 
people both in and out of government, to help shape 
major programs. Yet I suspect that not enough peo- 
ple outside of the federal government realize this 
when they are critical of the Administration. 

President Johnson's anti-poverty program is a good 
example of how business is deeply involved. Many 
major corporations operate job Corps camps, and 
more than 30 top corporation executives advise the 
Office of Economic Opportunity through the Busi- 
ness Leadership Advisory Committee. 

Much the same thing is happening in other areas 
I have dealt with such as the space program, the 
Marine Sciences Council, and the Council on Youth 
Opportunity. And as time goes on, I think we'll have 
even more of this exchange of ideas between govern- 
ment and the business and academic communities. 
Hopefully, the same approach will be carried over 
into state and local government. We're seeing some 
of this in New Jersey, for example, where Governor 
Hughes has top-level panels advising him on such 
problems as higher education and air and water pol- 
lution. In New York City, too, the business commu- 
nity has become actively involved in the city's youth 
programs this summer. 

Much more is needed, however, particularly at the 
community level. Since the Vice President is the 
liaison between the federal and local governments, 
I've been in contact with a number of mayors. One 
thing they all talk about is the difficulty of having to 
deal with so many different agencies on urban prob- 

lems. I can well understand their frustrations. But it 
seems to me that many of their problems might be 
alleviated with the help and advice of business. Cer- 
tainly, the managerial expertise of business would 
be a valuable asset in the planning and coordinating 
of city programs. 

Earlier I mentioned that many of my conceptions 
about the federal government have turned out to be 
caricatures. This is probably especially true of the 
people in government. Like most of the other Fel- 
lows, I have been impressed by the quality of the top 
officials in Washington. It seems to me there is at 
present a conscious effort to get the best qualified 
people into government regardless of political con- 
viction. However, like any large organization, the 
caliber of people varies widely. While there have 
been a number of career government employees pro- 
moted to high ranking positions recently, the federal 
government could do a good deal more within its 
own ranks to develop people. 

One way would be to adopt the business practice 
of moving young managers or administrators from 
department to department to increase their under- 
standing of how the organization functions as a 
whole. The Civil Service Commission is starting to 
move in this direction, but it is a long haul proposi- 
tion. Like business, government also has a dearth of 
talent, and many agencies are reluctant to give up 
their best people. But to promote this kind of inter- 
change — and you could broaden it to include other 
levels of government and even industry and universi- 
ties — would be a very important step that could 
make an impact on government management. 

This interchange of people, of course, is a two-way 
street. While it would be beneficial to have federal 
employees broaden their perspective, there is also 
a real need to have people on the outside who are 
more knowledgeable about government. The White 
House Fellows Program is one attempt to accomplish 
this. The 18 fellowships awarded this year may seem 
like a very small number; but in 20 years we will have 

a cadre of three or four hundred people who were 
exposed to a broad overview of government at an 
early age. Presumably all or most of them will go 
back to work in their professions or business. But 
they will undoubtedly retain an interest in govern- 
ment and a desire to contribute their services again 
at some later date. Even if they never return to Wash- 
ington, they will at least be an influence in their ov.'n 
communities and help radiate a more realistic atti- 
tude about the processes of government. The same 
thing, I'm sure, is true of the businessman, the scien- 
tist, or the university professor who serves on an 
advisory group. All will take away a better under- 
standing of what goes on inside government. 

My own experience as a White House Fellow has 
certainly sharpened my perspective, not only about 
the functions and operations of government but also 
about the diverse problems that federal officials face. 
My staff assignments have run the gamut from space 
and oceanography to youth activities and urban 
problems. I have perhaps been fortunate because 
the Vice President's office covers the full range of 
government interests. But all of the Fellows have had 
a chance to get involved in a variety of activities. 

It is, in fact, one of the stated purposes of the 
Fellows program that the assignments should 
broaden our understanding of the process of govern- 
ment but not necessarily entail work experience di- 
rectly in our chosen field. As examples of this among 
the current Fellows, we have a lawyer working in the 
Agriculture Department, a computer systems expert 
with the Department of Health, Education,and Wel- 
fare, a marketing manager on the White House staff, 
an information systems analyst working for U.N. Am- 
bassador Goldberg, and a management consultant in 
the Bureau of the Budget. All of this points up the 
fact that no agency in the executive branch is so 
narrow that a Fellow's individual abilities can't be 
utilized. For instance, one Fellow in the Post Office 
Department did a study on family planning which 
received wide attention. 

Working with Vice President Humphrey, Dr. Baer has found him to 
he not only a persuasive speaker but an impressive listener as well, 
with the ability to cut through to the essential points of a complex 
technical question. 

Work assignments are the heart of the Fellows' 
year, but there is also an extensive education pro- 
gram that runs concurrently. It begins with readings 
before starting the program, an intensive orientation 
in September, and then twice-weekly seminars 
throughout the year. At the seminars, we've had an 
opportunity to carry on informal, off-the-record dis- 

cussions with cabinet officers, congressional leaders 
and other prominent people from private and public 
life. One of the highlights of the year, of course, has 
been our meetings with the President, in addition, 
we've made several field trips, one to New York City 
where we met with Ambassador Goldberg, Mayor 
Lindsay, and Governor Rockefeller, among others, 
and a second to Chicago where we had a three-day 
look at urban problems, individually, many of us 
have also had a chance to travel with the officials we 
are assigned to work for. My most recent such trip 
was in late June when I accompanied Vice President 
Humphrey to Korea. 

Looking back on the past year, I think something 
the Vice President once said in describing his job is 
apropos. He said he has "very little authority but lots 
of advice." In a way, this is how most of the Fellows 
have viewed their year in Washington. We may not 
have had much authority, but we did have an oppor- 
tunity to come to grips with tremendously important 
problems and to contribute our own ideas and sug- 

Because life in the federal government can be an 
exciting and challenging experience, the temptation 
to stay on is great. Five of the first group of White 
House Fellows did remain, although one has since 
left to join Stanford Research institute. The others, 
I suspect, will be back in the private sector before 
long. Since the program is not in any way intended 
to recruit people for government, the great majority 
will always move on to make room for a new group 
of Fellows. 

When we do, I'm sure we'll all take back a much 
greater sensitivity for government and a realization 
that things aren't always as simple as they appear on 
the outside, in particular, I think everyone who goes 
through the White House Fellows program leaves 
here with a strong desire to become more personally 
involved at all levels of government. If there is one 
thing we've learned here, it is that Washington 
doesn't have all the answers. □ 


■ /c5p(" f|m«4^ 

Technology's Great Need: Information Retrieval 

By Walter K. MacAdam 

Someone once characterized engineering as the 
function of transferring bottlenecks from one loca- 
tion to another. Certainly experience tells us that 
every time we solve one problem we discover a few 
more staring us in the face. Today's major bottlenecks 
to progress tend to be man-made. And today, spe- 
cifically, engineers and scientists are creating one ail 
of their own. They are producing knowledge faster 
than they can collect and absorb it. In short, we are 
caught in a serious bottleneck in the transfer of 
scientific and technical information. 

Information transfer problems are not new; they 
have beset mankind for hundreds of centuries, ever 
since man began to depend on a merged intellect, a 
summation of the knowledge of many individual 
minds. Survival became subject to the ability to 
communicate verbally and to remember. Man's first 
knowledge limitation became one of language. 

About 6,000 years ago someone — probably an 
early engineer — moved that bottleneck by develop- 
ing the art of inscribing information on a tablet. 
Language became written. The collective information 
available to mankind increased — but its growth rate 
was slow. For several thousand years, knowledge in 
terms of recorded pages doubled only once in every 
thousand years, its spread among men was limited by 
availability of writing materials and the ability to use 
them. Man became literacy limited. 

in the 17th century, another engineer invented the 

Mr. MacAdam, vice president, government communications for 
AT&T, is serving as president of the Institute of Electrical and 
Electronics Engineers. 

printing press — and with it, another bottleneck. 
Suddenly, the growth rate of human knowledge 
speeded up. As measured by printed pages, it began 
to double about every hundred years. Soon, man 
became literature limited. The mass of information 
grew, carrying with it the constantly accumulating 
heritage of past discoveries of men no longer in this 
world. The information growth rate quickened until, 
during the last quarter century, knowledge has 
doubled every 20 years. By the year 2000 it will be 
doubling every ten years or less. 

Let's look at some specifics in this technical paper 
explosion. In 1966, 18 leading engineering societies 
in the United States spent $14 million in publishing 
technical literature. Even after a 40 percent cut by 
teams of reviewers, these societies published a com- 
bined total of more than 177,000 pages. This com- 
pares with only about 25,000 in 1946. 

In the field of electrical science and engineering, 
the largest engineering society is the Institute of 
Electrical and Electronics Engineers, with a world- 
wide membership of 160,000. The IEEE publishes 
about 10 percent of the world's primary technical 
literature in the electrical field. Twenty years ago its 
predecessor societies published 3,000 pages in three 
journals. Today, this has increased by a factor of 10, 
with the publication of 30,000 pages in 42 separate 

The ten-to-one growth ratio is of particular con- 
cern when one considers that the reading abilities of 
engineers and scientists have not increased, but 
competition from other sources for their time has 
increased. While the Institute has introduced some 
selectivity by producing specialized journals in more 

than 30 different fields, it still ships hundreds of thou- 
sands of journal copies throughout the world with 
the realization that members will find only a small 
fraction of the articles within their particular field of 
interest. We have reached the point where some 
laboratory management people are beginning to be- 
lieve it is cheaper and quicker to reinvent something 
than to search the ocean of literature to find what has 
been discovered — even in the same laboratory! 

Now, knowledge is no longer limited by the pro- 
duction of literature, but rather by the ability to 
locate and absorb what has been produced. We have 
moved the bottleneck again, and are now informa- 
tion retrieval limited. For the first time, also, a limi- 
tation is being imposed by man's physical and mental 
characteristics rather than by the techniques used to 
move and store information. In fact, we should con- 
sider ourselves fortunate that our previous bottle- 
necks have formed in the transfer system, which we 
could readily improve, rather than in the capacity of 
the human mind and its ability to understand, which 
remains relatively fixed. From now on, however, we 
will have to be more clever than lucky. 

The key: storage and retrieval 

The increasing rate at which technical papers are 
being produced is compounding the inefficiency and 
dilution of resources to the point where a worldwide 
attack on the problem is mandatory. It is not only a 
matter of retrieving information; it is a matter of the 
individual engineer's ability to support financially a 
massive and growing system, distributing publica- 
tions in bulk, which are read on a highly selective 
basis. What is needed is a more effective and flexible 
information storage and retrieval system, compatible 
for worldwide operation, and geared to man's limited 
information absorption rate. 

This is why so many technical societies and govern- 
ments around the world are feverishly working these 
days on information handling systems. In general, 
such systems are based on first producing a brief 

abstract of a technical article, then selecting a series 
of key words which appropriately classify the par- 
ticular topics and application involved. This con- 
densed information is next placed in a storage system 
— often these days in a computer — for rapid retrieval 
by individuals interested in a particular subject. 

In the United States the engineering societies have 
developed and operated an indexing and abstracting 
service for many years. This is administered by an 
organization known as Engineering Index, which 
produces digests of articles appearing in a wide range 
of engineering and scientific journals throughout the 
world. Comprehensive abstracting service has also 
been provided by the Institute of Electrical Engineers 
in the United Kingdom and by a service in the Soviet 
Union known as VINITI. This covers publications in 
the USSR, which produces a large share of the world's 
technical literature, and also produces abstracts in 
Russian of articles appearing in other countries. None 
of these systems, however, seem to meet the growing 
needs in the electrical and electronics area. 

One approach to designing better information 
handling systems is the work initiated in 1966 by 
Engineering Index, Engineers Joint Council and 
United Engineering Trustees in forming a "Tripartite 
Committee" to develop a plan for an up-to-date and 
comprehensive system. The IEEE and other engineer- 
ing societies are cooperating with this effort. Also, 
the National Academy of Sciences and National Acad- 
emy of Engineering have appointed a joint com- 
mittee, funded by the National Science Foundation, 
to study information systems concerned with science 
and engineering. Hopefully, this will be a clearing 
house and a means for avoiding wasteful duplication. 

Increased emphasis is also being placed on having 
authors or editors produce and publish abstracts and 
index data when an article first appears in print. The 
Engineers Joint Council has made specific recom- 
mendations and has issued suggested procedures for 
this so-called source abstracting and indexing, using 
a standard set of terms contained in a special diction- 


ary or thesaurus. This will eliminate long delays in 
subsequent abstracting and indexing by reference 
publications or information repositories. 

Computers will help 

Existing manual systems are also being converted to 
computerized storage and retrieval facilities. How- 
ever, great care must be taken to avoid losing data 
within the storage system as a result of defects in the 
indexing and retrieval codes. Likewise, the computer- 
ized arrangements must not deliver a shower of 
unwanted material as a result of too broad charac- 
terization of the inquiring terminology. 

The IEEE, recognizing how critical the situation has 
become, has taken several steps to organize a con- 
centrated program for selective information indexing, 
storage and retrieval suitable for computer applica- 
tion. This includes organizing a working group com- 
posed of experts In the field and adding to the head- 
quarters staff an outstanding specialist, previously 
head of the electrical engineering department in one 
of this country's major universities. In addition, the 
IEEE is cooperating with other societies in a joint 
study to explore interdisciplinary problems. 

The Institute is also undertaking another experi- 
ment. For the first time it is producing abstracts of 
articles which have not been published. One of its 
technical divisions, the Computer Group, which pub- 
lishes one of the specialized journals, has started a 
separate bimonthly publication titled "Computer 
News." Each issue includes, among other items, 
abstracts of recently received papers on computers, 
which papers have been stored in a central reposi- 
tory. Copies are available at a moderate charge to any 
member who, having read the abstracts, concludes 
that they will be useful. At the same time, a group of 
reviewers studies and selects papers of sufficient gen- 
eral interest to warrant subsequent publication in 
"Computer Transactions." This tends to reserve for 
that magazine's wider circulation those papers which 
are of interest to a larger audience. The primary pur- 

pose of the experiment at present is to assess the 
effectiveness of the new service. The central reposi- 
tory may be a useful storage medium for papers 
which are too long or too specialized to warrant 
general circulation. 

While we have only scratched the surface of a 
large and complex problem, these developments may 
indicate future modification of the role of a technical 
society in both its publications and its conferences. 
The exact shape of these changes is not clear, but 
there are several possibilities. The increasing need for 
selectivity among myriad specialized subjects may 
bring about the day when membership in an engi- 
neering or scientific institute will include the priv- 
ilege of receiving two specific types of publications. 
The first might consist of one or more journals con- 
taining articles selected for their general interest. The 
second might contain indexed digests of specialized 
articles available for prompt retrieval from a central 
information repository. 

It is conceivable also that the technical library, as 
we know it, will assume a role of diminishing im- 
portance. It is manifestly wasteful to store the same 
rapidly growing mass of information in thousands of 
different locations to meet scattered needs. On the 
other hand, one could easily forecast emergence of 
technical information access centers containing only 
current reference texts and broad coverage periodi- 
cals, but having access to centralized information 
repositories via facsimile communications channels. 

If these trends materialize, the improvement in 
technical communication will be felt worldwide, in 
view of the universality of all new technology. 
Cooperativeplanning must be undertaken byall engi- 
neering societies, national and non-national. Mem- 
bers should be encouraged to contribute progressive 
ideas to a worldwide exchange of views. For this is 
the only path that can lead us to a solution of our 
common problem — the means to cope, within our 
human limitations, with the world's growing body 
of scientific information. D 


Into Learning 

Freely mixing practical and "pure" research approaches, 
behavioral scientists at Bell Telephone Laboratories are doinj 
some highly individualistic prospecting into a 
barely mapped part of man's nature .. ."the learning process.' 

Dr. Ernest Z. Rothkopf, a behavioral psychologist spe- 
cializing in studies of the human learning process at 
Bell Telephone Laboratories, is a very skeptical man. 
He doubts, for example, that educators and business- 
men really know how to teach, primarily because they 
do not yet have what he calls a sufficient "technology 
of instruction." 

"Despite the millions of dollars that are spent an- 
nually on education and training, we honestly don't 
know yet how people learn, what is the best way of 
presenting material, and how to evaluate how well 
the material is comprehended," Dr. Rothkopf 

Trying to find the answers to some of these ques- 
tions — and many others like them — is one of the 
aims of Bell Labs' behavioral research laboratory in 
Murray Hill, N. J. There, on behalf of Bell telephone 
companies, scientists are exploring the learning 
process in an effort to improve educational and train- 
ing programs throughout the Bell System. With more 
than 800,000 employees and a constantly changing 
communications technology, even a small improve- 
ment in the quality of its training programs can pro- 
vide the Bell System substantial savings. 

"What we are trying to do," Dr. Rothkopf says, "is 
to find out more about methemagenic behavior, that 

is, behavior that gives birth to learning. This behavior 
has a shape that can be charted, and a persistence in 
time that can be measured. 

"To find out scientifically the factors that affect the 
shape and duration of the learning activity requires 
isolating and studying one variable at a time, subject- 
ing every tentative hypothesis to statistical verifica- 
tion. Though this may seem like moving a mountain 
with a teaspoon, there are a lot of people with tea- 
spoons attacking this mountain." 

The work of Bell Labs' behavioral research labora- 
tory is divided into three broad fields with a number 
of facets to each field: 

• A "Sensory and Perceptual Processes" group, 
whose studies include short-term and primary visual 
mechanisms; computer studies of depth perception; 
and the physiology of depth perception. 

• A "Learning Processes and Measurement" group, 
which includes a sociologist working on information 
retrieval, plus psychologists specializing in subjects 
ranging from visual distortion to psycholinguistics. 

• A "Human Information Processing" group that in- 
cludes the Rothkopf studies in written materials, an 
experiment in new forms of self-administered instruc- 
tion, a statistical analysis of speech quality, and an 


effort to plot the mental processes involved in retriev- 
ing material from memory. 

"What we get from this, "Dr. Rothkopf observes, 
"are pipelines to findings in many fields. Besides his 
own studies conducted here, each psychologist keeps 
up-to-date in his speciality and is alert to apply what 
is discovered elsewhere, in this way the Bell System 
can apply what may be pertinent to its needs, and at 
the same time support work that contributes to the 
general body of knowledge which others— educators, 
for example— can also use." 

Questions dictate reading strategy 

One current series of Dr. Rothkopf's experiments 
of special interest to educators and training directors 
zeros in on the role of questions in producing "meth- 
emagenic behavior." Tests he has conducted over 
several years have convinced him that the nature and 
timing of test questions play a key role in learning. 

"According to the experiments we have made so 
far, people adjust their reading according to what 
they have previously been tested for. But they must 
experience an actual test. Merely telling them they 
will be tested does not have much effect. Questions 
are the main form of dialogue between teachers and 
students. If we understand how to use questions we 
can devise a system for helping people through diffi- 
cult material." 

In addition to the experiments on the role ques- 
tions play in learning from texts, Dr. Rothkopf also 
is conducting studies on the effect of repeated read- 
ings on both comprehension and ability to spot new 
materials added to paragraphs. "The long-range aim," 
he says, "is to write more effective educational and 
training texts." 

Projecting ahead. Dr. Rothkopf foresees one appli- 
cation of a "behavioral technology of learning" in the 
creation of a new kind of job: an "instructional edi- 
tor" who will be trained in the learning-from-texts 
principles uncovered by the behavioral scientists. The 


Among the studies ol the learning process underway at Bell Labs 
is the experiment Dr. Ernest K. Rothkopf is conducting to deter- 
mine the relation between mental effort and dilation of the eye. 

instructional editor will know the ideal places to pre- 
sent key information, the best length of paragraphs 
and sections for retaining attention, the best order 
for presenting concepts, how often to repeat facts 
and ideas, when and how to include tests, even per- 
haps the words most easily assimilated. 

As Dr. Rothkopf describes him, the instructional 
editor, trained in psychology and statistics, will fill 
the gap between the author who tends to write from 
his experience rather than to a student's learning 
needs, and the conventional editor who is concerned 
with format, grammar and style. 

"Most important," Dr. Rothkopf says, "the instruc- 
tional editor would be responsible, and have the 
requisite skills, for evaluating the effectiveness of the 
texts he prepared. But," he adds, "before we can have 
the services of such a fellow, we must first discover 
the principles we intend to teach him." 

The behavioral research at Bell Labs that may con- 
tribute to the skills of tomorrow's instructional edi- 
tors include studies in such learning-related facets as 
man's attention span, memory retrieval, and language 


manipulations, including the computer-aided studies 
of Dr. Sheila Pfafflin in paragraph structuring and 
learning with the aid of mnemonic devices. 

The study of paragraph structure is, according to 
Dr. Pfafflin, a relatively new area of study. "Much 
work has been done on smaller units of language, 
phrases and sentences. But if we areever to write with 
predictable effectiveness, more will have to be under- 
stood about what we call 'connected text.' " 

To dig into the way people understand paragraph- 
ing — even if intuitively — participants in one of Mrs. 
Pfafflin's experiments are confronted with "disas- 
sembled paragraphs" — lists of sentences that were 
parts of paragraphs — and asked to judge which were 
first and second sentences in their original context. 

The findings indicate that some sentences contain 
clues that help reveal their location in a paragraph. 
While first sentences of first paragraphs are more 
easily recognized than first sentences of last para- 
graphs, the majority of the consistently identified 
cues to paragraph structure occur in second sen- 
tences, which tend to contain "linking structures" 
with antecedents in a prior sentence. 

The influence of structure 

In a related effort Mrs. Pfafflin gives participants a 
set of sentences in random order and simply requests 
that the original paragraphs be assembled. "This gives 
curious results," Mrs. Pfafflin notes, "which we're try- 
ing to evaluate. Words in common in a number of 
sentences don't explain the way participants organize 
them, as we thought it might. Pronoun references 
may explain order better, but we're getting the feel- 
ing that something deeper in the structure of lan- 
guage may key people's way of organizing material. 

"To follow this lead, we're devising new experi- 
ments where we replace 'content' — nouns, verbs, 
adverbs and adjectives — with 'paralogs,' made-up 
words that roughly correspond to the originals in 
form, but without recognizable meaning. Out of 

what's left, the 'structure' part of language — such as 
prepositions, conjunctions, and pronouns— we'll get 
insight into the role structure plays in building up a 
meaningful text." 

Stressing that these explorations are new and may 
take many unforeseen turns, Mrs. Pfafflin feels one 
possible benefit could be more compact texts than 
most of those in use today. If we knew what really 
carried the meaning burden in written material, we 
could write more efficiently. 

In addition to studying paragraph structure and the 
role of questions in the learning process, behavioral 
scientists at Bell Labs are addressing themselves to 
problems of languages. "In a way, studying how 
people learn, process and experience language is like 
a fish trying to study water," says Lee McMahon, of 
the learning processes and measurement department. 

"To determine what features of language people 
remember," Dr. McMahon says, "one psycholinguist 
here, Mrs. Jacqueline Sachs, reads test participants 
stories and then asks whether a test sentence oc- 
curred in the story. She's found that only the general 
meaning tends to be recalled, not actual word orders 
or other features ordinarily thought of as necessary 
conveyors of information. In fact, only the last sen- 
tence of the story is likely to be remembered verbatim. 

"If the actual language need not be remembered 
exactly for the information to be conveyed, as Mrs. 
Sachs has found, then where is this information, and 
in what form? How do people extract — or, maybe, 
impose — information from or on sentences?" 

By parcelling out carefully delimited statements to 
test subjects. Dr. McMahon has obtained data sug- 
gesting that most incoming words and sentences 
trigger memory stores, rather than carrying their own 
meaning. A simple example is the statement, "There 
will be snow tomorrow." Literally, this could mean 
many things, from "The snow which is here today will 
remain tomorrow," to "Somewhere in the world 
there will be snow tomorrow," etc. Yet, the hearer 
has no trouble instantly adding all the necessary infor- 


mation - such as the concept of "falling," which isn't 
actually mentioned — to complete the communica- 
tion intended by the original speaker. 

"An experiment currently under way is providing 
a more precise description of this phenomenon, and 
yielding other data, too," says Dr. McMahon. "While 
we're not ready to publish final results, we are begin- 
ning to determine through reaction-time tests, which 
of several grammatical structures are most easily un- 
derstood, and even which among a group of syn- 
onyms are picked up fastest by the test subjects." 

Probing "the retrieval aspect" of memory 

Psychologist Saul Sternberg concentrates on an- 
other aspect, "the retrieval process — a big unknown 
in most theories of memory. In any given case," Dr. 
Sternberg asks, "how can we say whether something 
is forgotten or merely unretrievable at the moment, 
unless we understand about this process?" 

Citing studies dating back into the 19th century. 
Dr. Sternberg shows that "the most popular line of 
inquiry has always concerned retention and forget- 
ting, without explicitly dealing with the obvious fact 
that without retrieval there can be no evidence about 
retention." To isolate this process, he asks test partici- 
pants to remember a list of from one to six digits. 
Then he or she is asked whether a particular "test 
digit" is one of those in the list. Reaction time re- 
quired to answer is measured to the nearest milli- 
second, and the times for the various list lengths are 
plotted on a graph. 

Among the findings to date is one that Dr. Stern- 
berg describes — in one of the articles he has written 
for scholarly journals in his field — as "remarkable." 
This is the mind's automatic scanning of the entire 
list regardless of whether or not it contains the test 
digit, or of where in the list the test digit appeared. If, 
for example, the memorized sequence is 312654 and 
the test digit is "1," it takes the average subject the 
same time to push the "yes" button as it does if the 

test digit is "5." In other words the mind scans 
"312654" then says, in effect, "Yes, 2 is here." 

in explaining this phenomenon, which would at 
first glance seem "inefficient," Dr. Sternberg empha- 
sizes the extreme high speed at which the scanning is 
done: 30 characters per second, on the average, or 
about four times as fast as man can "talk to himself." 
"This speed factor," says Dr. Sternberg, "may prove 
the process 'efficient' after all, because it probably is 
more 'economical,' i.e., faster, to scan the whole list, 
and then decide whether the test digit appeared, than 
to stop for a decision at each digit, saying as it were, 
'3 is not 2,1 is not 2 -ah, 2 is 2!' 

"When we ask a subject to name the item that fol- 
lows a test digit in a memorized list, and thereby re- 
quire him to locate the test digit rather than merely 
to determine whether it is present, the rate of 'data 
processing' comes down from 30 to about four char- 
acters per second — closer to the speed at which we 
can 'talk' inwardly." Another study — in which a list 
of digits is flashed on for a fraction of a second, and 
leaves the subject with a brief visual afterimage to 
answer questions from — shows that the scanning 
process in this instance is self-terminating. In other 
words, the "scanner" flicks off when it hits the digit 
that's asked for. 

Armed with evidence that the retrieval process 
varies with the kind of information being retrieved. 
Dr. Sternberg is now embarked on new studies on 
character recognition. "Consider," he says, "how 
many forms of the letter 'A' we can recognize, written 
by many hands, printed in dozens of type faces. What 
happens in the mind to permit this? What effect does 
distortion have on retrieval time? How much process- 
ing occurs before the image is compared with mem- 
ory? Answers to questions like these may have impli- 
cations for transmission systems, training and 
education methods— even perhaps the way telephone 
books are arranged." 

Another set of studies focuses on auditory percep- 
tion. Dr. Anne Treisman, who with her scientist-hus- 


Behavioral scientists at Bell Labs looking into the learning process 
include, left to right, Lee McMahon, Saul Sternberg, Ernest Roth- 
kopi. Sheila Pfalflin, Anne Treisman and Wayne Custalson. 

band is spending a year at Bell Labs as visiting 
researchers from England's Oxford University, cur- 
rently is charting "the limits of people's ability to 
attend to a variety of auditory stimuli received 

An attractive brunette whom, as one of her co- 
workers puts it, "no one would take for a scientist — 
until they hear her on her subject," Dr. Treisman has 
published a number of monographs on the qualities 
of human attention. At present, she is probing into 
what has been called the cocktail party effect. "If we 
analyze what the ear hears in a roomful of conversing 
people, it becomes astonishing how the brain can, 
more or less at will, eavesdrop on a particular conver- 
sation while 'monitoring' other channels for specially 
relevant information, such as one's own name," Mrs. 
Treisman says. 

By piping two different kinds of data into a set of 
earphones and asking people to listen to one, both 
or "mostly one but also certain kinds of material in 
the other," Mrs. Treisman has begun forming a work- 
ing description of what are the limits of attention. A 
key finding so far is that all input information can 

usefully be divided into the "form" (loudness or soft- 
ness, male or female voice) and "content" (particular 
words and concepts). "If the earphone the subject is 
told to listen to is carrying a connected discourse, 
about all he can hear of the other response is some 
general sense of the 'form' of it. The 'content' is so 
supressed that even when tapes are played backward 
or switched to German, subjects do not notice. How- 
ever," Mrs. Treisman notes, "if we tell subjects to 
listen for a specific signal — to say, tap when the word 
'tap' appears in either channel — their ability to 
'monitor' and perform this task is much greater." 

Dr. Treisman feels that a more precise understand- 
ing of the operation and capacity of human attention 
is relevant for educators as well as businessmen who 
must know what can be demanded of people in order 
to plan new jobs. Beyond that, however, she is reluc- 
tant to speculate more precisely about how her data 
may be applied. 

Does "new" mean better?" 

Like most researchers, the behavioral scientists at 
Bell Labs are disinclined to speculate about the spe- 
cific applications of their work. Dr. Rothkopf puts the 
problem in perspective when he says, "Society must 
educate increasing numbers of people. And since ed- 
ucation is a life-long process, industry must carry its 
burden through training programs and at the same 
time, assist in the field of general education. For 
everyone to benefit, we must get at the fundamentals 
of the learning process. 

"So much formal training and education is going 
on, so much money is being spent, and yet we know 
so little about our effectiveness. Until we can be more 
precise in measuring today's systems of imparting in- 
formation, how will we be able to evaluate the rela- 
tive usefulness of new techniques?" Dr. Rothkopf 
asks. "We must strive for a real technology of learn- 
ing, measurable and predictable. So much depends 
on it in this time of increasing demands." D 



Statements of policy and opinion 

Editor's Note: ■Communications Technology in a Changing Society" was the 
subject of a recent conference at the Bell 7e/ep/ione Laboratories at Murray Hill, 
New Jersey. Prominent educators in the humanities and social sciences from 
38 colleges and universities attended the program, which focused on the impact 
of the telecommunications industry on society. Among the speakers was Ben S. 
aimer, president of AT&T, who discussed "Business Responsibility in a Changing 
Society." A condensed version of his text follows: 

Just what is the social responsibility 
of business? Does it extend beyond 
the production of goods and services 
at a profit? And if so, how far? 

In themselves, these questions 
would have been deemed specious a 
few decades ago. Then it was accepted 
with reasonable certainty that the re- 
sponsibility of business was solely to 
produce products or services for the 
customer at a profit. 

How has this changed, if at all? 

I believe it is realistic and candid 
to say that industry still operates pri- 
marily to provide goods and services 
at a profit. Every other job a corpora- 
tion can take on depends on this. Of 
course, it is often said, too, that the 
corporation, by nature, originates with 
public permission and exists by public 
approval. But its survival also depends 
on its profitability. 

It is still the chance of reward that 
motivates people to invest their money 
in any undertaking. People who in- 
vest in OLir business expect a profit 
that is sufficient to encourage them to 
commit their savings. 

This principle, as I said, is basic. But 
what does seem to be changing is the 
concept of the corporate role. I would 
term it a broadening of objectives. As 
important as profits are, they are not 
an end in themselves — they are a 
meaf7S to an end. The end is a better 
society with opportunity for all to 
share in the abundance our industries 

As you know, the corporate device 
originally was used to relieve the de- 
veloping nations of Europe of some 
of their burdens. The East India and 
the Hudson's Bay and the London 
companies were well known exam- 

In this country, the idea of the so- 
cial function of the corporation has 
persisted from early days. The Virginia 
Supreme Court said in 1809 that cor- 
porations should not be chartered ex- 
cept "in consideration of services to 
be rendered to the public." 

A revived obligation 

So when we talk of the broad re- 
sponsibility of corporations we are 
reviving an old idea that was tempo- 
rarily eclipsed in the era of trusts and 

Evidence now indicates that we are 
edging back to the earlier view in 
which corporations are expected to 
assume a broader role in society. Be- 
yond magazine articles and speeches, 
we hear a clear invitation from govern- 
ment for corporations to enter the 
social sector. President Johnson said 
in the Economic Report last year: 

"Only through a creative and coop- 
erative partnership of all private 
interests and all levels of government 
— a creative Federalism — can our 
economic and social objectives be 
attained." just a few weeks ago, the 
President went a step further. He ap- 

pointed a committee to determine 
how the resources of private business 
and labor can be mobilized for a broad 
assault on city slums. 

Clearly a pattern is emerging. The 
government apparently would wel- 
come business help. Many public 
groups are asking for business help, 
and some business leaders have 
indicated a willingness to become 
involved. The problem is how to go 
about it. 

I'm sure that many of the commit- 
ments to greater involvement on the 
part of businessmen today are moti- 
vated by what is known as the "en- 
lightened self-interest" theory. 1 might 
give you just one example from my 
own business of how enlightened self 
interest can motivate action in social 
problems. I would estimate that our 
present plant investment in large cities 
and metropolitan areas is 70 per cent 
of our total plant investment. 

Obviously it is in the good interests 
of the company if the deterioration of 
the central cities can be halted, if 
practical urban renewal projects can 
be undertaken, and if the average 
American family can once more feel 
that cities are pleasant places in which 
to live. So it is not remarkable that 
many telephone company people 
have involved themselves in urban 
rehabilitation. Call it practical busi- 
ness judgment, or if you prefer, en- 
lightened self-interest. 

At the risk of oversimplifying, 1 be- 
lieve it is usefLiI to think of the corpo- 
ration's responsibilities to society as 
having three different origins. 

First, there are responsibilities that 
are imposed, such as hours of work 
and minimum standards of compen- 
sation, health standards, working con- 

Second, there are responsibilities 
that the corporation creates through 

its application of new technology. 

And third, there are responsibilities 
that the corporation adopts or assLimes 
upon itself. 

I shall not dwell on the imposed 
responsibility. There is little option 
here — Government sets the standards 
after all voices have been heard, and 
industry complies. We have lived with 
government regulation for many years 
and accept it without reservation. 

However, I would like to say a few 
words about the created and adopted 
social responsibilities. In those areas 
there is considerable option available 
to industry. 

First, the created social responsibil- 
ities: the conversion of the telephone 
system from manual operation to dial 
is a good example. Bell telephone serv- 
ice is now 99 per cent dial. In 1920 it 
was 99 per cent manual. 

The conversion to dial was set up 
on a gradual schedule. Operators were 
offered jobs in other departments or 
in other locations. We took advantage 
of the high turnover among women 
employees. When operators left to 
start families, we didn't replace them. 
Thus the dislocation of people was 

Technology is said to be neutral. But 
it is people who apply new methods 
and experience the consequences. 
And it is they who must be considered 
when change is introduced. 

My belief here is that in considering 
created social responsibilities, corpo- 
rations are more and more aware that 
new technology changes society, and 
sometimes leads to profound conse- 
quences. Circumstances demand that 
careful consideration be given to the 
social implications of each change. It 
is no longer enough, if it ever was, to 
introduce new technologies and let 
things fall where they may. 

It is in the area of adopted or as- 
sumed responsibilities that business 
is offered the broadest opportunity to 
make important contributions that can 
correct social ills. 

Bell System actions 

I'd like to take a quick and candid 
look at what the Bell System is pres- 
ently doing about its adopted social 
responsibilities. Let me say, most earn- 
estly, that we have a long way to go. 
But 1 do believe that more than lip 
service is being given. 

Cutting down air pollution is an 
adopted responsibility that we take 
seriously. Within the last three years 
we have halted the use of incinerators 
in 181 buildings, and are moving to 
deactivate more. Nine out of ten of 
our heating plants are now fired by 
gas and light oil, not heavy oil. We are 
working to increase this proportion. 
The Bell System's fleet of 113,000 
motor vehicles could add seriously to 
air pollution. We have made it a mat- 
ter of company policy that all cars and 
trucks added to the fleet have exhaust- 
control equipment whenever the 
manufacturer has it available. 

As for providing minority groups 
with enlarged opportunities, coopera- 
tion with the Plans for Progress and 
such organizations as the Urban 
League has enabled us to increase 
substantially the number of Negro 
employees in Bell telephone com- 
panies. In the last three years the num- 
ber has grown from 29,000 to 51,000, 
a 75 per cent increase, compared to 
a 13 per cent overall increase in em- 
ployment. A number of programs have 
been initiated by the Bell companies 
that provide aid, education and train- 
ing to the disadvantaged, particularly 
high school dropouts. We estimate 
that during this summer we'll provide 

work for about 8,500 young men and 
women, or about one for every 100 
current Bell System employees. 

Beautifying the environment can be 
costly. But in the interest of more 
attractive residential neighborhoods, 
we have determined that where ter- 
rain permits we are going to put all 
telephone cables underground. Of 
new homes built last year, 600,000 or 
about 60 per cent of new residential 
construction, could be served with 
buried cable, and that percentage is 
going to go up substantially this year 
and next. 

Finally, as for support of higher 
education, this is a social responsibility 
that has already been accepted by al- 
most all large corporations. In 1966, 
financial support of education by cor- 
porations totaled $288,000,000. The 
total for the Bell System, mainly grants 
to private institutions, was about 

The desire to enlarge its involve- 
ment in social problems is, 1 believe, 
a prevailing feeling in industry today. 
But 1 believe it is realistic to acknowl- 
edge that anything we accomplish in 
the area has its roots in our nation's 
productive capacity. 

I'm sure business is going to find 
its role in solving socio-economic 
problems and fill it as vigorously as it 
has in producing goods and services. 
Business has some unique qualifica- 
tions. Particularly, it is structured to 
understand and meet the needs of 
people at the local level. 

In conclusion, let me raise one more 
question: Is this relatively new willing- 
ness to get involved in the social area 
a legitimate pursuit for business? 

1 believe so, it puts us in league 
with the future, and I accept Ibsen's 
thought when he wrote, "I hold that 
man is right who is most closely in 
league with the future." D 


For handling the fast-growing variety 

and volume of communications today and tomorrow, 

techniques such as pulse code modulation 

encode various kinds of electronic signals 

into streams of binary digit "bits" which, 

in the next decade, will carry thousands of phone calls, 

several TV programs and computer data 

all on the same channel. 

The Code's the Thing 

If anyone examines even briefly the history of human 
communication, he will find running through it a 
common — and basically simple — thread. From the 
howls and grunts of cavemen to today's television 
via satellite, communication has consisted of the 
coding of intelligence. This process has taken many 
forms — aural, visual, and electrical — but its essential 
feature is the reduction of information to arbitrary 

No one today knows what the cavemen's spoken 
language sounded like, but certainly it covered the 
basic needs of a primitive face-to-face information 
system. Then came more permanent means of coding 
and transmitting information: written symbols — the 
hieroglyphics of ancient Egypt, the stylized picto- 
grams of Chinese, the Roman alphabet you are now 
reading — supplemented spoken words and extended 
communication from its individual, man-to-man 

Indeed, for centuries men have been preoccupied 
with the problems of communicating over the 

increasing miles that separated them. Creek relay 
runners, smoke signals, jungle drums, the printing 
press — all helped, but it was electricity that gave man 
his seven-league boots and enabled him to communi- 
cate instantly across a continent or an ocean. 

The telegraph harnessed this new power, but 
worked on a principle as ancient as civilization: the 
coding of information in its most simplified form, 
on-off pulses that produced audible clicks. Essen- 
tially the same principle is used in present day digital 
computers to process and record information as ones 
or zeros, which can also be described as yes-no, is- 
isn't, or present-absent. 

"Basically," says Dan F. Hoth, director of Bell 
Telephone Laboratories' transmission facilities plan- 
ning center at Holmdel, N. J., "the same method of 
coding is being used today in the Bell System's new 
digital transmission systems which represent various 

Richard Kerdock runs tests on repeaters for new 12 digital trans- 
mission system. Fanned-out cables facilitate measurement of 
simulated transmission flaws, such as cro5s-(a/k. 



kinds of electronic signals — voice, television, fac- 
simile, computer data — as a stream of binary digits, 
or bits. Since the stream consists simply of on-off 
pulses, ones or zeros, all signals look and behave 
exactly alike once they are converted into bits — 
reduced, in the electronic sense, to the least common 

A "bit" has been described as the amount of 
information needed to remove the uncertainty 
between yes or no. While this description refers to 
an electronic yes or no — the presence or absence 
of a pulse — it is an instinctive and natural course 
for modern technology to take. The encoding of 
information into yes-no, on-off pulses grows from 
insight into the fundamental process of human rea- 
soning. Things, at least in the logic of the Western 
world, cannot both be and not be. Aristotle pro- 
claimed that a thing can only be itself, never its 

The shape of (hings to come: the oscilloscope shows the actual 
pulses in a stream, operating at 224 million hits per second, 
and carrying two television programs at once. 

opposite. And the Bible, (the Book of Matthew) says, 
"But let your communication be Yea, yea; Nay, nay: 
for whatsoever is more than these cometh of evil"— a 
Biblical command, if you will, to use the binary code! 
Decisions never spring from maybe, for a decision, 
by definition, must be yes or no. Everyone constantly 
makes yes-no decisions to choose alternatives or 
guide actions. The housewife: Shall I lock the door 
or leave it open? Shall I put the cat out or leave her 
in? The executive: Shall we risk going for more debt 
capital or not? Shall we launch the new product now 
or not? 


In any case, the yes or no answer precipitates 
specific action, either positive or negative . . . some- 
thing to be done or not done. The chaining together 
of such simple yes-no answers as on-off electronic 
pulses in a stream makes it possible to transmit the 
wide variety of information by which men today 
communicate. One means for translating such sig- 
nals into binary digits — ones or zeros — is called 
pulse code modulation, which is becoming increas- 
ingly important in the Bell System. 

"Flexibility and economy are key words in digital 
transmission," says Mr. Hoth. "For years we have 

been working on ways to make better use of our 
transmission facilities. In large metropolitan areas, 
there is a limit to how many ducts and cables you can 
put under city streets." 

First introduced in the Bell System about five years 
ago, digital transmission has provided one answer to 
the problem of economically handling the growing 
volume of communications. Systems now in use can 
carry 24 simultaneous two-way conversations on two 
pairs of wires in a cable and have proved to be highly 
efficient, especially in the nation's large cities. 

While this use of a binary digit pulse stream to 
transmit the human voice is helping to meet an im- 
mediate need, it is not an end in itself. It is now what 
might be called the progenitor of a hierarchy of 
digital systems, each progressively higher in capacity. 
Higher capacity comes through higher speed of the 
pulse stream — that is, the more pulses, or bits, per 
second, the more information the stream can carry. 
The high-speed systems also operate over longer dis- 
tances, just as high-speed roadways are designed to 
carry cross-country traffic. Now under development 
at Bell Laboratories are systems operating at nearly 
300 million bits per second, which one day may carry 
thousands of phone calls, several TV programs and 
high-speed computer data all on the same channel, 
across the continent. 

"We have to see the end of the road before we 
start at the beginning," says Mr. Hoth. "We look 
ahead to a complete, nationwide network built on 
digital transmission. We're looking ahead more than 
ten years, but we know we're going to need it." 

Indeed, the need is evident. In one area of Bell 
System development alone — Picturephone service — 
high capacity transmission systems will become of 
primary importance. There is now no practical way 
to transmit any volume of Picturephone calls over 
long distances with the high quality the service must 
have to be commercially successful. High capacity, 
low distortion digital systems may be the only 
means of putting Picturephone service on a working 


basis. Also, the business and educational uses of high 
speed data processing equipment are multiplying so 
rapidly that the volume of messages generated by 
machines "talking" to machines may soon exceed 
the number of voice conversations between people. 
Communications engineers, faced with the shape 
of things to come, consider that high speed digital 
transmission systems, with their capacity for carrying 
many different signals at once, will provide the most 
efficient, the most economical and the highest qual- 

ity means of meeting these new needs looming on 
the horizon. 

"Because all kinds of signals — voice, TV, data — 
become alike once they're converted into streams of 
electronic pulses, we can interleave pulses from dif- 
ferent sources and send several different kinds of 
signals over the same channel. We can monitor the 
quality of transmission, regenerate the pulses every 
mile or so and then convert them from pulse form 
back to their original form at the destination," says 

At Bell Laboratories' digital transmission laboratory in Holmdel, Francis Rusin watches a transmission system of the future take form. 
Predecessor of the one-day T4, this experimental system transmits 3,456 voice channels or two TV programs at once via the laser 
beam in left foreground, and operates at 224 million pulses per second 


Richard A. Kelley, who is director of the digital 
transmission laboratory in Holmdel. 

"Imagine that you're the postmaster in a local post 
office, confronted with the Christmas avalanche of 
packages. They're all sizes, shapes and weights. 
Imagine, too, that you have a machine which can 
break down all packages into small units of the same 
size and weight, give them identifying numbers, then 
shoot them out through a tube to a distant post 
office. There another machine sorts them out, re- 
stores them to their original shapes and sizes, and 
gives them to the parcel post carrier. 

"Obviously, you can't actually do that with pack- 
ages. But essentially that is what pulse code modula- 
tion does with electronic signals. Digital transmission 
not only allows us to fit signals from many different 
sources on the same channel but it also eliminates 
interference between signals carrying different kinds 
of information," adds Mr. Kelley. 

The technique can also be valuable for other rea- 
sons. For example, the pulse stream can be scrambled, 
and there is absolutely no way to unscramble it ex- 
cept with a planned decoding system. Since encoding 
and decoding in pulses can be done only at the 
origin and destination, anyone who tapped the pulse 
stream along the route would get nothing but a 
meaningless jumble that would be impossible to 
sort out. 

Research in the PCM technique at Bell Laboratories 
dates back to the 1940's, when experimental systems 
using vacuum tubes were built. It soon became quite 
clear, however, that these had serious limitations. It 
was the advent of solid state devices, specifically the 
transistor, that was the key to practical application of 
digital transmission in the telephone network. Just as 
"third generation" computers depend on such solid 
state devices as transistors and integrated circuits, so 
do high-speed digital transmission systems. 

"One of the problems inherent in developing a 
transmission system is that what is introduced today 
must be compatible with what was introduced yes- 

terday, and what will come along tomorrow," 
Mr. Kelley says. "Consequently, experimental work 
must be directed toward designing compatible mod- 
ular system 'blocks,' which will work with existing 
equipment and with future transmission techniques 
such as wave guides and laser beams. We must always 
plan for complete flexibility of interconnection, and 
this is one of the most attractive features of digital 
systems. Another feature is the use of equipment 
common to more than one channel. For instance, 
equipment that does the coding into pulses can be 
time-shared, moving about among many channels as 
does a chess master, moving about among many 
tables, playing many games in sequence." 

By year's end, the Bell System will have about 
350,000 voice channels of the so-called T1 design that 
can transmit about 1.5 million pulses per second. 
Within the next few years, theT2 system with a capac- 
ity of 6.3 million pulses per second will be made by 
the Western Electric Company and introduced in Bell 
System telephone companies throughout the country. 

Further ahead in the future is the top of the hier- 
archy, called the T4. When it emerges from the 
laboratory into commercial use, it will operate at 
a speed of 282 million pulses per second, and will 
transmit 4,032 voice channels or three television 
pictures at once, or combinations of Picturephone, 
data and other signals. 

"The capacity and speed may not seem to mean 
much in this day of big numbers, but it is extremely 
important for its potential," states Mr. Hoth. "High 
speeds and huge capacity are necessary in today's 
technology to transmit signals without distortion and 
to 'speak the same language' as computers. Pulse 
code modulation, in effect, speaks the same lan- 
guage with all types of communications. 

"With the growing demands for compatibility, 
flexibility, greater speed — as well as quality and 
economy — we're convinced," Mr. Hoth adds, "that 
the digital systems will meet the needs in the years 
ahead." D 



Affair of the 

Spindled Manager 

by Richard W. White 

In glancing over my notebooks for the year 18 — , I am 
struck by the variety and complexity of the cases 
solved by those, by now, well known methods of my 
friend Sherlock Holmes. 

The public is not yet prepared to hear all the facts 
concerning the notorious blackmailer. Baron von 
Boo. Nor is it yet prudent to reveal the events leading 
up to that April morning when Lola Leer, the music 
hall dancer, was found stark naked and raving mad in 
the bell tower of Winchester Cathedral. But a note 
from Holmes at his bee farm in Sussex assures me that 
it Is time now to disclose the facts in the affair of the 
spindled manager. 

It was a wild November night. The dun coloured 
fog swirled through the streets of London, driven by 
gale winds and lashing rain. My wife being away on 
an extended visit with her mother, I had temporarily 
taken up lodgings again in the familiar rooms in Baker 
Street. Nothing had changed. The coal scuttle with its 

Mr. White, a contributor to a number of national magazines, is a 
member of the public relations department at The Southern New 
England Telephone Company. 

cargo of cigars, the Persian slipper filled with shag 
tobacco, the gasogene on the sideboard, the bullet 
pocks on the walls from Holmes's occasional indoor 
pistol practice — all was as I had remembered. 

A blazing fire danced on the hearth. Mrs. Hudson 
had cleared away the dinner things, and I had settled 
down with a novel. The great detective lay on the 
sofa, staring at the ceiling and sending up cloud after 
cloud from his cherrywood pipe. The ringing of the 
electric bell jarred the quiet of our cozy sitting room. 

"Good heavens! Who can that be, Holmes?" 

Holmes favored me with a heavy-lidded glance. 
"Given the present population of this city, my dear 
fellow, the possibilities are rather too extensive for my 
modest talents. But I hear steps and we . . ." 

Before Holmes could complete his remark, there 
burst into the room a large, well-dressed man, ruddy, 
graying and obviously distraught. 

"Which of you is Sherlock Holmes?" he cried, his 
chest heaving as he fought for breath. 

"I am," said my friend, sitting upright on the sofa. 
"And this is my colleague. Dr. Watson. But you seem 
upset. Pray, avail yourself of the comforts of that arm- 



chair while Watson prepares a medicinal concoction 
for us. Something with gin, I should think, Watson." 

While I busied myself at the sideboard. Holmes 
surveyed our visitor shrewdly. Then he said, "How 
can we be of service to you, Mr. Clyde Phinque of 
New Orleans, U.S.A.?" 

Our caller started as though he'd been shot. "How 
on earth . . . ?" 

"The card pinned to your lapel, the one that reads, 
'Hi! I'm Clyde Phinque from New Orleans!' — it was 
a clue. The rest was simple deduction." 


"A trifle. Aside from your name, the fact that you 
suffer from hypertension, are a member of the Lions 
and the Greater New Orleans Chamber of Commerce, 
were a corporal in the Coast Artillery, and that you 
arrived here in a cab drawn by a roan mare and driven 
by a top-hatted East Indian with a broken front tooth, 
I know virtually nothing about you." 

"You are a wizard, Mr. Holmes!" 

"Hardly that, I think. Ah ! Thank you, Watson. Now, 
Mr. Clyde Phinque, what is it that brings you out on 
such a night?" 

"Murder, Mr. Holmes! The murder of Mr. Subordi- 
nate Whyne, London manager for my firm. Cranny 
Mole's Sorghum Products, Inc." 

The detective's eyes brightened. "Have you con- 
tacted the police?" 

"No. But I fear they will be in touch with me. You 
see ..." 

At this juncture, a heavy knock sounded on the 
inner door. In a moment. Inspector Lestrade of Scot- 
land Yard, flanked by two hulking constables, was in 
the room. 

Mr. Clyde Phinque of New Orleans, U.S.A.," the 
little official said, "I arrest you in the name of the 
Queen for the foul murder of Mr. Subordinate 
Whyne, late London manager for Granny Mole's 
Sorghum Products, Inc." 

"Oh, I am lost!" cried Phinque. 

"There, there," said Holmes. "Pull yourself to- 

gether. Tell me, where did the melancholy event 

"At the office, at 111 Barleycorn Row. I'd just come 
from there." 

"You're welcome to have a look around, Mr. 
Holmes," Lestrade said. "Nothing's been moved as 
yet. But you'll find it's plain as a pikestaff. Murder's 
been done. And this Yank done it." 

"Did it," murmured Holmes. 

"I didn't!" shrieked Mr. Clyde Phinque of New 
Orleans, U.S.A. 

"We shall see. Go along with these men, Mr. Clyde 
Phinque. Watson and I shall go straightway to Barley- 
corn Row and see what's to be seen. Courage! When 
I have formed an opinion I shall make my report to 

The police and their hapless prisoner departed. 

"Come, Watson!" cried Holmes. "The game's 
a-foot! This is a dark business, and we shall have our 
work cut out for us to shed some light on it." 

Holmes and I were soon rattling through the night 
and the storm, and in minutes we found ourselves in 
Barleycorn Row. The scene that awaited us in the 
office of Granny Mole's Sorghum Products, Inc., was 
one I shall never be able to erase from my memory. 
My scalp crawls as I recall it now. 

There was no sign of a struggle. The Spartan interior 
of the office seemed undisturbed. But in the glow of 
the half-dimmed gas lamps we could see, sprawled 
forward on his desk, the late London manager — with 
a spindle through his heart. 

"Poor devil!" Holmes murmured. "But what's this?" 

Holmes pried a piece of paper from the dead man's 
hand. "Humph! Seems routine enough. Look at this, 

I took the paper and read: 

Dear Whyne: 

This is to remind you that illness and absence reports are due 
on the 29th. Yours was late again last month, you'll recall. 

Also, the interim pro)ected year-end sales results estmiate was 
due Friday last. And it would be helpful if you would submit your 


estimate of office supply needs by month's end. Use Form 363A1, 
which replaces Form 363A, please. 

Are you quite certam you sent me those expense vouchers for 
September? They still haven't turned up. Perhaps you could work 
them up again? 

Incidentally, your figures on the Correspondence Report don't 
tally. We don't have a 'Miscellaneous' category, so you shall have 
to make a judgment as to whether those five letters were orders, 
complaints or commendations, re-work your Form 90, and get 
it to me by the first of the month. 

May 1 agam remind you that Form 9D-3 has been superseded? 
Accounting will not honor your voucher for lamp chimneys until 
they have the proper document. 

Let me remind you of our Beloved Founder's pungent motto: 
■It's them little things what separates the sawdust from the sor- 
ghum.' I commend it to you. 

Yours for a tidy operation, 
C. Phinque 

P.S. Your triplicate memo requesting an additional clerk should 
have been a quadruplicate Form Y2-30A. I mention it only as a 
matter of information as it will be impossible to add a person to 
your staff until Personnel have run an efficiency study on your 
force. 1 cannot foresee that happening before June. Tighten up! 
Delegate! Think sales And get those papers in. 

"What do you inake of it. Holmes?" I asked. 

"Julius Caesar, Act V, scetie v. Remember your 
Shakespeare, Watson?" 

"I don't see . . ." 

"No, I suppose you don't. )ust look at those files, 
Watson." He waved a thin hand in the direction of a 
row of wood cabinets lining the far wall. "I fancy 
we'll find what we're looking for there." 

I followed Holmes to the files. His keen grey eyes 
scanned the labels. 

"Notice, Watson, that of forty file drawers, twenty 
are labeled 'Forms;' ten 'Memoranda;' five 'Corres- 
pondence;' four 'Inactive;' and one — only one — is 
marked 'Sales,' which, I take it, is the chief business 
of the firm." 

"What does it mean. Holmes?" 

"It means," said Holmes, stuffing his pipe, "it 
means, Watson, that I have found the killer." 

"That's wonderful, Holmes! Who is it?" 

A bitter smile played about the thin lips. "There, 
old fellow," Holmes indicated the row of files with 
the stem of his pipe, "there is your murderer. Mr. Sub- 

ordinate Whyne was the victim of those innocuous 
looking cabinets — or of their contents, rather. Con- 
sider, Watson, what it must have been like to try to 
run an active sales organization from beneath an ava- 
lanche of paper." 

"I can imagine. But . . ." 

"And when the unfortunate Whyne received this 
latest memorandum, the one we found clutched in 
his hand, it was the final straw. He flung himself on 
his spindle in despair, and so perished." 

"Like Brutus running on his sword! That explains 
your citing Shakespeare." 


"What a ghastly end!" I stood for a moment con- 
templating the corpse of the late London manager. 
Then 1 cried, "But, Holmes! This means that Mr. Clyde 
Phinque of New Orleans, U.S.A. is innocent!" 

"Is he, Watson? I wonder. I think we shall leave 
that to the official force and to British justice." 

"You mean . . . ?" 

"I mean that I wash my hands of this sordid affair. 
If Scotland Yard cannot make a case against him, Mr. 
Clyde Phinque of New Orleans, U.S.A. will go free. 
But in the court of my private opinion, Watson, he is 
guilty — as guilty as if he had spindled his London 
manager with his own hand." 

Holmes buttoned up his waterproof. "Come, Wat- 
son," he said. "Shall we try the fried oysters at The 
Savoy? This outing has given me a devilish appetite." 

As the public knows, Mr. Clyde Phinque of New 
Orleans, U.S.A. was released for lack of evidence. He 
returned to the States a broken man. I recall my illus- 
trious friend's reaction to the newspaper accounts of 
the inquest. 

"Well, Watson, "said he, taking up his violin, "there 
is a higher court and a higher justice." 

"You mean the Queen's bench? But, Holmes, the 
man's been exonerated. He's . . ." 

Holmes chuckled. "Good old Watson!" He laid his 
bow across the strings, and the strains of Autumn 
Madneis filled the room. D 




Highway emergency phones 

Motorists who use the recently com- 
pleted 178-mile Adirondack Northway 
between Albany and St. George, New 
York, will not have to worry about 
being stranded in sparsely settled 
mountain country. Installed at half 
mile intervals along the Northway are 
222 emergency telephones. Lifting the 
telephone off the hook brings the 
motorist into contact with the nearest 
state police office. 

Similar highway emergency report- 
ing systems are now in use in half a 
dozen states including Maryland's Belt 
Parkway and California's labyrinth Los 
Angeles freeway. Among the systems 
under consideration is one for the 
New York Thruway which calls for 
1,148 phones spaced every 2,000 feet 
along the cross-state highway. 

The reporting systems, which are 
installed by telephone companies un- 
der contracts with state and federal 
highway authorities, have proven to 
be effective and efficient ways to pro- 
mote highway safety. One big advan- 
tage of highway telephones is that 
they are available to all motorists with- 
out any special expenditure on their 
part. And unlike car-borne, two-way 
radios, the use of telephones places 
no additional burden on the con- 
gested radio frequency spectrum. 

This does not mean, however, that 
mobile radio has been shunted aside. 
On the contrary, radio equipped vehi- 
cles are being put to increasing use 
not only to report highway accidents 
or hazards but also to assist police and 
fire departments in providing better 
protection of human life and property. 

Five Bell System companies are cur- 
rently participating in the "Commu- 
nity Radio Watch" programs initiated 
last December by the Motorola Com- 
pany. Together with other corpora- 
tions and private citizens, telephone 

company employees driving radio 
equipped vehicles are on the lookout 
for street crimes, fires and accidents 
that may be observed during work ac- 
tivities. They call a central dispatcher 
or telephone operator who relays the 
report to the appropriate agency. 

It's estimated that more than 40,000 
radio equipped vehicles from busi- 
nesses alone are participating in the 
emergency reporting program. 

Bacteria-free space vehicles 

When space vehicles land on Mars or 
Venus, American scientists want to be 
certain they carry no microbes from 
earth to interfere with whatever life 
forms may exist there. 

In preparation for the eventual 
probes of outer space, the National 
Aeronautics and Space Administration 
has asked the Sandia Corporation, a 
Western Electric subsidiary, to study 
ways of preventing contamination of 
space vehicles. Scientists and techni- 
cians at the Albuquerque, New 
Mexico, laboratory have assembled a 
model planetary landing vehicle in a 
specially-developed laminar-flow 
clean room that holds promise of be- 
ing a bacteria-free environment. 

Working with NASA microbiolo- 


gists, Sandia scientists are running 
checks on the surface of the vehicle 
to see if any bacterial colonies can be 
found. NASA is looking to Sandia, a 
prime contractor for the Atomic 
Energy Commission, to come up with 
techniques for "debugging" future 
space craft. 

Superconducting temperature rises 

The highest known temperature at 
which a material becomes supercon- 
ducting — that is, loses all resistance 
to electric current— has been reported 
by Bell Laboratories scientists. 

They recently announced discovery 
of a composition of niobium, alu- 
minum, and germanium which be- 
comes a superconductor at 20.1 
degrees Kelvin plus or minus 0.1 de- 
grees. (Superconducting temperatures 
are measured on the Kelvin absolute- 
temperature scale where zero is minus 
459.7 degrees Fahrenheit and repre- 
sents the absence of heat.) 

The discovery is the first substantial 
progress in raising superconducting 
temperatures since 1954 when Bell 
Labs scientists succeeded in raising 
the transition temperature from be- 
tween 16.9 to 17.1 degrees Kelvin to 
18.05 degrees Kelvin plus or minus 
0.1 degrees. 

The seemingly small increase in 
superconducting temperatures, a 10 
percent rise, has three important im- 
plications: (1) it shows that what had 
been thought to be a possible maxi- 
mum superconducting temperature 
can now be exceeded, (2) it opens 
the possibility of building supercon- 
ducting magnets that can produce 
higher magnetic fields than ever be- 
fore, and (3) it eases the problem of 
refrigerating the superconductor be- 
cause this can be done for longer 
periods with less coolant. 

International study probes effects of air pollution 

Which is the greater health hazard: 
London's fog or our own East Coast 

British and American doctors hope 
to be able to answer that question 
and others when an international 
medical study is completed later this 
year. Co-sponsored by AT&T and the 
Johns Hopkins School of Hygiene and 
Public Health, the study is using hun- 
dreds of telephone men, most of 
whom work out of doors in suburban 
areas, to check on the affects of pol- 
luted air. 

Many of the men taking part in the 
experiment also participated in a simi- 
lar study five years ago. The 1962 re- 
sults demonstrated that the British 
have more chronic bronchitis but that 
Americans were subject to more coro- 
nary disease. 

Dr. R. W. Stone, assistant medical 
director of AT&T, said that by re-ex- 

amining the group, they hope to learn 
whether the increase in atmospheric 
pollutants both here and in England 
has resulted in an increase in bronchi- 
tis and heart disease. 

Telephone men were selected for 
the study not only because of occu- 
pational similarities but also because 
of similar social, educational and fi- 
nancial backgrounds. The big differ- 
ence is where they live and what they 

Three testing areas are being used 
in the U.S.: Washington, D.C., West- 
chester County, New York, and Balti- 
more, Maryland. Another study will 
be conducted in New York City next 

A representative of the Nippon 
Telegraph and Telephone Company is 
also participating in the current study 
in preparation for administering a sim- 
ilar study in Japan. 

jjmes Cogarty of New York Telephone is taking part in an international study of the 
effects of smog on outside telephone workers. Administering the checkup is Dr. Fernando 
Sanchez of the Johns Hopkins School of Hygiene and Public Health. 


Telstar was space breaker 

Live television broadcasts from Lon- 
don, Tokyo, and even Moscow occur 
so frequently these days that most 
viewers pretty much take them for 
granted. And yet, it was just five years 
ago that the Bell System's pioneering 
Telstar satellite ushered in the era of 
international television. 

Launched July 10, 1962, Telstar 1- 
and its sister satellite, Telstar II, which 
was put into orbit a year later— proved 
worldwide communications by satel- 
lite was both possible and practical. 

Although radiation silenced it early 
in 1963, Telstar I transmitted the first 
live television across the Atlantic in 
addition to handling experimental 
voice and data transmissions. The 
higher-orbiting Telstar II was out of 
the reach of the radiation belts around 
the earth so that, for nearly two years, 
it was able to carry out a series of 
highly successful tests that included 
the first live TV from Japan. 

Both satellites are still in orbit and 
will probably remain there for at least 
200 years. However, neither is func- 
tioning any longer. Telstar H's very 
high frequency beacon was turned 
off in 1965 after all useful information 
had been obtained. The satellite was 
still in good working order, but the 
frequencies it used were needed for 
other satellites. 

Ceramic materials are quick frozen 

Scientists at Bell Laboratories in Mur- 
ray Hill, New Jersey, have developed 
a new "quick freeze" method of pre- 
paring ceramic raw materials. 

The new process provides uniform- 
ity both in the size of the ceramic par- 
ticles produced and in the mixing of 
chemical compounds within the par- 
ticles — characteristics that are not 

possible with conventional milling or 
grinding methods. 

The ceramic raw material, in the 
form of a water solution of high purity 
salts, is quick-frozen, then freeze- 
dried and heat treated to remove 
water and other volative constituents. 
The converted droplets are then re- 
duced to powder for ceramic manu- 

Particles formed by this method re- 
tain the exact chemical composition 
and high purity of the components 
from which they are processed be- 
cause no contamination from milling 
and grinding is introduced. Also, with 
the new process, chemical reaction 
between ceramic raw materials is pos- 
sible at temperatures hundreds of de- 
grees below that required to attain 
equivalent results with conventionally 
mixed oxides. 

Rainfall patterns studied 

If you sometimes think it's raining 
"bucketfuls," you may be very nearly 
right. A unique measuring system at 
Bell Laboratories indicates that the 
pattern of rainfall at particular spots 
during a storm may indeed resemble 

The information comes from a sys- 
tem which records continuous data 
on rainfall at 100 points in a 50-square 
mile area surrounding Bell's Crawford 
Hill Laboratory at Holmdel, New Jer- 
sey. Rain gauges are mounted on tele- 
phone poles where they tell their story 
over leased telephones lines to re- 
corders at Crawford Hill. 

Because rain affects microwave sig- 
nals, such data is important in plan- 
ning microwave communications sys- 
tems that beam signals over the earth's 
surface and from earth into space. 

Once recorded by the Bell Labs sys- 
tem, data on a given rainstorm can be 

replayed on a computer and com- 
pared with taped data describing mi- 
crowave transmission during the same 

The project is yielding interesting 
and surprising results. Measurements 
taken seconds apart in a rainstorm, 
for example, show that rainfall rates 
vary widely at a single gauge as well 
as simultaneously at the 100 gauges. 
Localized regions of heavy rainfall ap- 
pear to drift about slowly, saturating 
certain areas with rain while other 
areas get less than their share. 

Electronic switching to increase 

The Bell System will spend about $700 
million over the next five years for 
electronic switching systems, AT&T 
Board Chairman H. I. Romnes told the 
New York Financial Writers at their 
annual dinner. 

Describing the introduction of elec- 
tronic central offices as the biggest 
development job AT&T has ever 
tackled, Mr. Romnes said electronic 
switching will, in effect, provide a 
nationwide special-purpose computer. 

Such innovations, he said, are part 
of the increase in computer communi- 
cations that "promises a vast enhance- 
ment of our capacity to manage" the 
Bell System's increasingly complex 
economic activities. Computer com- 
munications, he stated, are "our best 
hope for bringing order and direction 
of what might otherwise become 

Mr. Romnes added that the ESS pro- 
gram is indicative of the Bell System's 
need for "tremendous sums" of cap- 
ital. AT&T, he said, has been account- 
ing for nearly 40 percent of the 
nation's total annual corporate equity 
financing and about 15 percent of all 
corporate sales of security issues each 
year. D 


And we were glad to share them— with hundreds 
of people from over 40 nations who visited us 
last year to learn about the telephone business. 

They came from places like Chad, Dahomey, 
Malawi, Togo and Bechuanaland; and from 
France, Germany, Japan, India and Australia. 

All these people had one thing in common. 

They wanted the latest information about 
modern telecommunications and we gave it 
to them. 

They saw how our fast nationwide switch- 
ing system works. Learned how scientific 
breakthroughs are converted into better 
means of communications. And studied the 

day-to-day work of our operating companies. 
We're glad to do everything we can to help 
people improve their telephone service as 
we keep improving our own. 
^_^ ^^ We may be the only 

[^^C\ OiMSlM P'^°"^ company in town, 
KZy 1^'.5^.'« but we try not to act like it. 


American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

Bulk Rate 

U.S. Postage 


Washington, D.C. 

Permit No. 43083 

57-08698-M OL 15 


Primed in U.S.A. 





September/October 1967 


telephone magazine 

GCI 2 i9&? 


Incentives to Progress 

by H. I. Romnes 

Chairman of the Board, AT&T 

(Editor's Note: In connection with the interstate rate case, 
the Bell System has been emphasizing the importance of 
incentives that encourage service improvement. Mr. 
Romnes talked about these incentives in a recent speech 
at the Telephone Pioneers' annual meeting in Toronto. 
The following is an excerpt from that talk.) 

Of all times that I can remember, it seems to me 
that now is the time when government most 
needs to encourage the incentives of industry. It is 
now that we need to crank up the engine of eco- 
nomic growth to create jobs for more millions of 
people in the decade ahead. It is now that govern- 
ment and business need to work together to solve 
the problems of the cities. And in our own case, in 
communications, it is now that new technology, new 
systems, new services offer widening opportunities 
to help industry cut costs; to help educators meet 
their fast-growing tasks; to help government organ- 
ize all its efforts; to help new businesses come into 
being and make their expanding contribution to the 
country's well-being. 

So I urge, that in the broad framework of our 
need to meet investors' expectations, regulation 
establish ground rules that will aid and abet the most 
vigorous management effort. This means a regula- 
tory approach that will warmly approve the goal of 
good earnings, taking into account at the same time 
that the business must not skimp on doing all the 
important things that it ought to do— pay good wages, 
adequately train its people, accept the risks and 
the costs of innovation, render quality service, and 
take firm conscientious initiative in helping to meet 

social and environmental problems. 

Such a creative approach by regulation, I submit, 
is necessary to insure that all important requirements 
for a good job will be met. And the spirit I have in 
mind is the very opposite of cost-plus. For this same 
approach places an imperative demand on manage- 
ment for quality performance. It demands that we 
develop and invest in advanced technology. It de- 
mands that we continuously introduce improve- 
ments in service and economics of operation. It de- 
mands that we open new markets. It demands that 
we share the benefits of our progress, in all these 
respects, among customers, employees, and share 
owners alike. 

This is what we get into, you see, when we ask for 
incentives. We get obligations. But this is exactly my 
point. This is what we want. We want obligations 
and we want to rise to them. We want every de- 
mand placed on us to show what we can do . . . 

The key to the best progress is the freedom to 
strive toward the twin goals of good service and 
good earnings. It is surely the duty of regulatory 
bodies to require that we provide the best possible 
service at rates that are equitable and as low as we 
can make them consistent with what our customers 
desire. I am confident, however, that this can best 
be accomplished by the approach I have indicated. 
Put aside the outworn concept that low rates must 
be equated with narrow margins of profit. Let the 
kind of incentives ! have been discussing impose 
their demands. We will respond, I am certain, with 
new dimensions, and new values, in communica- 
tions service. D 


telephone magazine 


Leighton C. Gilman, Editor 

Donald R. Woodford, Managing Editor 

Al Catalano, Art Director 

Edwin F. Nieder, Assistant Editor 

Richard R. Draper, Assistant Editor 

On the cover — Deep-Sea divers adjust a tow sling on the sea 
plow used by AT&T to bury parts of two transatlantic telephone 
cables beneath the ocean floor. Operation Sea Plow, launched 
last summer to increase the reliability of international commu- 
nications, pitted a Jules Verne combination of mechanical mas- 
tery and human derring-do against the mysteries of the ocean 
deep. See page 2. 

H. I. Romnes, Chairman of the Board 
Ben S. Gilmer, President 
John D. deButts, Vice Chairman 
Charles E. Wampler, Secretary 
John J. Scanlon, Treasurer 

2 Cables Under the Sea 
8 Readiness to Respond 

10 Managing Money through Communications 

by Robert W. Eriich 

16 Bell Forum 

18 Adapting Products to People 

by Henry Dreyfuss 

25 Lasers— the promise in a beam of light 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

Cables Under the Sea 

Steadily increasing calling volumes and the growing importance 
of international communications create new demands for reliability. 
Helping to provide fail-safe communications is a unique underwater 

sea plow that buries telephone cables on the continental shelf. 

There was a time, the theory goes, when the con- 
tinents of North America and Europe were locked 
tightly together like pieces in a giant puzzle. Then 
the Altantic came between them, and it was a long, 
long time before modern communications bridged 
the ocean to reunite them. 

Little more than a century ago, news from the Old 
and New Worlds was still traveling back and forth 
along the slow, uncertain routes of the ocean 
steamers. Then, in 1866, the first telegraph cable was 
laid successfully across the Atlantic. Other new trans- 

atlantic links followed: 40 years ago by radiotele- 
phone, 11 years ago by telephone cable, five years 
ago by communications satellite. 

Today, the people of the United States and Europe 
—in fact, people all around the globe— are bound 
closer together with each new advance in the trans- 
mission of telephone, telegraph, radio and television. 

The steady increase in overseas telephone calling 
is one indication of the growing reliance placed on 
international communications. The role of communi- 
cations assumes even greater proportions in times 


of stress as the recent Middle East conflict showed. 
All available means were used to the straining point 
during the crisis to keep government officials in con- 
tact, to keep the peoples of the world informed, and 
to keep worried relatives and friends in touch. De- 
spite the special arrangements made to handle about 
three times the normal volume of calls to the Middle 
East, delays in completing calls to Israel reached as 
high as 10 days during the height of the crisis. 

Such events as the Arab-Israeli war highlight the 
pressing need to improve and make more reliable 
those means of communications that are now avail- 

The Bell System took a big step in that direction 
this summer when it plunked a yellow-painted sea 
plow into the waters off New Jersey to bury parts 
of two transatlantic telephone cables under the ocean 
floor. The purpose was to protect the cables against 
damage by commercial fishing vessels, damage which 
in the past has caused serious disruptions on vital 
transatlantic circuits. 

The successful burying operation did more than 
increase the reliability of international communica- 
tions and reduce AT&T patrol and repair costs. No 
longer will remote— and unusually more expensive- 
cable routes be selected in order to circumvent com- 
mercial fishing locations. Shore areas formerly re- 
jected can now be selected for the new cables that 
will be placed in the years ahead. 

Rapid strides have been made in the use of com- 
munications satellites since the Bell System launched 
its Telstar® satellite five years ago. But even though 
AT&T is the largest user of satellite circuits in the 
world, underseas cables continue to serve as the 
workhorse of international communications. 

The need for fail-safe communications, coupled 
with steadily rising calling volumes, is the reason 
for the continuing use of both cables and satellites, 
as well as improved radio-telephone circuits. 

"No single means of transmission can carry the 
burden of overseas communication alone," says 

C. C. Duncan, AT&T assistant vice president for over- 
seas communications. "The key to dependable inter- 
national communications is diversity. Satellite, under- 
sea cable and radio-telephone circuits are the ingre- 
dients of this necessary mix— and will continue to be 
in the foreseeable future. Protecting cables by bury- 
ing them is an important advance for one of those 

Shore-end problems known for years 

Before Cyrus Field completed laying the first over- 
seas telegraph cable— which John Greenleaf Whittier 
once described as "the fall of the ocean's wall"— 
Matthew Fontaine Maury, a pioneer in the science 
of oceanography, warned Field that "the greatest 
practical difficulties" would be encountered "at 

either end of the line," where the cables reach shal- 
low water. 

As Maury foresaw, shore-end problems have 
plagued otherwise reliable submarine cable systems. 
The big offenders: commercial fishing nets and 
dredges that snarl and snap the cables as they are 
dragged along the ocean bottom. Cables have also 
been occasionally broken or damaged by undersea 
landslides, icebergs, currents, action of the surf and 
rough ocean bottom conditions. 

The Bell System, aware of the threat posed by 
fishing activity when it laid the first transatlantic tele- 
phone cable, picked a route off Newfoundland which 
was relatively free of fishing activity. Within three 
years, however, trawlers had moved into the area 
in large numbers, and the cable was broken for the 
first time. 

AT&T's Long Lines Department, which is respon- 
sible for overseas service, decided then that the best 
way to protect cables was to bury them beneath the 
ocean bottom. To examine Newfoundland's conti- 
nental shelf. Bell Telephone Laboratories designed 
an electrically-powered sled with a television camera 
mounted on its front. The sled, able to maneuver 
underwater like a helicopter, sent its pictures through 
an umbilical cord linking the sled to a ship. The films 
showed the shelf to be an undulating plateau of clay, 
sand, gravel and rock. 

Bell Labs develops survey vehicle 

Bell Labs then developed a 7,000-pound survey 
vehicle outfitted with communications and measur- 
ing devices to collect more underwater information. 
The towed vehicle had a weighted steel wheel to cut 
through the soil. The wheel told a discouraging story: 

Before the sea plow ever touched water, Bell Telephone Labs 
conducted practice runs, left, at its Chester, NJ., laboratories. 
At right, the plow's tailgate opens and a simulated repeater drops 
into a trench dug out by the plowshare. During the underwater 
operation, the trench filled in as the plow moved along, hiding 
cable and repeaters beneath a cover of sand and clay. 

the bottom was much harder than expected, and 
burying cable there would be impractical. 

By 1965 two transatlantic cables had been laid off 
Tuckerton, N.J., an area seldom visited by the trawlers 
working the Atlantic coastal waters. But, it wasn't long 
before a Canadian fisherman discovered large scallop 
beds in the area, and fleets of scallopers raced to 
the scene. Soon the ocean bottom was being raked 
by dredges weighing 3,500 pounds, and the dredges 
were catching the cables. 

Long Lines shifted its burying plans to New Jersey. 
Oceanographic surveys conducted by Bell Labs in- 
dicated the bottom was generally flat with several 
inches of sand blanketing a layer of hard-packed clay. 
Coincidentally, the underwater studies confirmed 
oceanographic theories about the glacial age makeup 
of the coast. A shoreline similar to the one now used 
by New jersey bathers was found 40 miles out under 
25 fathoms of water. 

Results of the survey called for a plow to slide 
along the ocean floor on four sled-like runners. Tele- 
phone cable feeds from a towing vessel through the 
plow's bellmouth and feed tube into a four-inch 

wide trench furrowed out by the plowshare. Auxili- 
ary plows automatically widen the trench when re- 
peaters, amplifiers that recharge the signal every 20 
miles, pass through. 

Sea trials useful 

Sea trials for the 14-ton plow began in late 1966, 
and continued until last spring. Pulled through the 
firmly caked clay by the Canadian cable repair ship 
and icebreaker, the John Cabot, the plow buried 
practice cable about two feet under the bottom- 
deep enough to be safe from commercial fishing 

But there were some bad moments. Twice a towing 
sling broke, and the plow tumbled over on its back. 
Once the plow crashed into a small uncharted reef 
and became stuck— "like a snagged fish hook," ac- 
cording to one observer. As a result of such incidents, 
the equipment and plowing procedures were modi- 
fied and more trials were conducted before actual 
operations got underway. 

With the approval of AT&T's overseas partners and 
other owners of the two cables off the New Jersey 

, ^-J 


Sldii III, a miniature submarine, found a safer palti for t/ie plow 
after an unchartered reef was encountered on the bottom. 

Crewmen on the stern of the ship help to guide the plow as it 
is lifted off its mountings at the start of the operation. 

The plow is slowly lowered over the side of the John Cabot by 
a 30-foot-long crane. Divers wait below in a motor boat. 

shore, "Operation Sea Plow" was launched during 
the first week of July. 

In addition to the Cabot, the British cable ship 
Stanley Angwin acted as a floating test room through- 
out the operation, continuously making circuit checks 
as the new cable was placed. 

The sea plow flotilla also included deep sea divers 
who were used primarily to hook and unhook the 
plow under water, two tugs, and a ship carrying the 
miniature submarine. Star III. Pictures taken from the 
submarine, which tracked the old route of the cables, 
helped determine how many miles of new cable 
should be buried, and showed that there was no need 
to bury inside the 20 fathom line where a double 
armored section of cable was found to be undam- 
aged and partially buried by ocean currents. 

With the Cabot chugging along at one knot or less 
in water ranging from 120 to 900 feet deep, plowing 
began on July 5 at a point about 35 miles at sea. 

Some parts of the bottom were harder than others. 
When the plow ran into especially stiff clay, the 
plow would shudder to a stop and Captain Duncan 
Tosh would have to cut the power of the ship's pro- 

pellers, carefully bringing them back into action as 
the plowshare slowly began to cut its way through 
the soil. At times, tension on the tow line reached 
80,000 pounds, and as much as 4,500 horsepower 
was required to pull the plow. 

Extremely precise navigational equipment kept the 
tow ship— and the plow— on course. Water-jetting 
bow thrusters with 1,000 horsepower each steadied 
the ship against the wind and current. When the 
weather turned bad, a tug tied to the bow helped 
maintain the ship in position. 

By July 8 more than 40 miles of new cable had been 
buried and spliced at two ends to a cable leading to 
France. Burying of about 60 miles of cable to England 
began the next day, and was completed in five days. 

The success of Operation Sea Plow clears the way 
for next Spring's laying of the first high-capacity tran- 
sistorized undersea cable from Jacksonville, Fla., to 
St. Thomas in the Virgin Islands. Scallop beds about 
40 miles off the Jacksonville shore aren't being fished 
at the present time, but they may attract fisherman 
in the future. Now, it doesn't matter. The shore-end 
section will be buried from the start. D 

As the plow hits the water, a diver gingerly hops aboard to straighten 
one of several guy lines from the ship to the plow. 

Television views of the plow at work were taken by three cameras 
on the plow and seen on screens in the ship's control room. 

Readiness to Respond 

The Bell System's capability to respond 
swiftly and effectively to emergency 
situations was put to test on July 17 near 
Tucson, Arizona when a repeater station 
for the coaxial cable system running from 
New York to Los Angeles was dynamited. 

About 30 minutes after the explosion, 
all 5,400 circuits carried on the three- 
channel cable were rerouted over alter- 
nate facilities and back in service. And 
within 12 hours, complete transmitting 
power was operating through tubes con- 
necting the damaged cable to a van 
truck equipped as a temporary repeater 
station. Less than three days after the 
blast ripped through the station, new and 
refurbished equipment was operating, a 
new building had been constructed, and 
service was back to normal on the cable 
system. F.B.I, and Tucson Sheriff's Office 
officials conducting the investigation 
believe that vandalism rather than sab- 
otage was involved. 

The ability to switch rapidly to alter- 
nate facilities while the cable system was 
out of service — and the speed with 
which the new facilities were built and 
installed — resulted from careful advance 
planning and close cooperation on the 
part of the AT&T Long Lines department, 
the local operating telephone com- 
panies, and the Western Electric Com- 
pany, the Bell System's manufacturing 
and supply arm. 

Ironically, it was another explosion 
that reinforced the Bell System's need 
for alternate facilities and plans that 
could be quickly implemented to restore 
communications services. On May 28, 
1961, two major routes to the west coast 
were interrupted when dynamite blasts 
destroyed three amplifier stations in 
Nevada and Utah. Since then procedures 
have been modified to insure even more 
dependable communications. D 

July 19: 2:00 p.m. - Refurbishec 
equipment bays moved into nev 
Splicing crews start restoring 
permanent cable facilities. 
8:00 p.m.— Finishing touches | 
put on roof of new building. I 

July 17: 8:16 p.m. — Alarm in 
Ei Paso central office indicates 
cable failure between Lordsburg 
and Tucson, Arizona. 
8:43 p.m. — First circuits 
restored on alternate facilities. 
9:30 p.m. — Technical crews 
inspect damage to repeater station. 
Discover rear wall demolisfied, 
door blown off, and 
roof partially destroyed. 
Interior of building and 
transmission equipment 
badly damaged. 

1:00 a.m. — Temporary service 
by connecting cable 
jck equipped as repeater 
ith emergency equipment. 
1. — Installation of new 
nt begins as debris of 
1 is hauled away, 
n.- Walls of 
ding completed. 

July 20: 6:40 p.m. - Less than 
three days after dynamite blast, 
building and all equipment 
completely restored. Service 
on cable system back to normal 

The use of simple and practical methods 

of communications to perform the complex tasks 

of cash management can produce 

substantial savings in time and money 

Managing Money 
Through Communications 

by Robert W. Ehrlich 

Companies today are vitally concerned with getting 
as much mileage out of cash as possible. Whether 
they are collecting, investing or disbursing money, 
Treasurers generally seek to keep the amount of idle 
cash at a minimum. 

There has, of course, never been a single best 
answer to financial management. The methods used 
depend on the situation in each company, on the 
customers it serves, and on the federal and state laws 
where it operates. That is why, for example, the Bell 
System uses a wide variety of ideas and approaches 
in conducting its cash management. I'm sure that in 
other large businesses that operate on a nationwide, 
or even a regional basis, you'll find a similar variety of 
ways of performing these tasks. What these busi- 

Mr. Ehrlich is assistant treasurer — iinancial division at AT&T. His 
division is responsible for banking and financial practices, investnnent 
analyses, and management development and training. 

nesses share in common is a desire to operate over 
an extended region of the country while at the same 
time carrying on business as a local member of each 
community. It seems to me that communications — 
and here I mean communications in the broadest pos- 
sible sense — represents the essential link in joining 
these diverse objectives in one method of operation. 

The ways the Bell System manages its funds illus- 
trate how communications can be an effective tool in 
financial operations. Not all of our methods are ap- 
propriate to every business, of course, but many of 
them can and do have wide application. 

In preparing this article, I talked with financial peo- 
ple in a number of other businesses, and 1 found there 
are three fundamental stages to cash management 
that seem to emerge in any discussion of the subject. 
First, there is the question of how we go about ren- 
dering bills to our customers. Second, there is the 
problem of mobilizing the cash flow to put it in the 


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place where it will be of use. And finally, there is the 
matter of disbursing cash in order to meet the 
requirements of the business. 

600 million bills a year 

in the Bell System, bills are rendered on a monthly 
basis and include several kinds of items on one bill. 
This is in contrast to other businesses which may ren- 
der a bill for each separate service at the time the 
service is performed. All of the 108 accounting of- 
fices in the Bell System use some form of cycle billing, 
mailing some of their bills each day or every few days. 
This is done primarily to smooth out the work flow. 

In the Bell System as a whole, we render about 600 
million bills per year which include, among other 
things, the charges for some 5 billion long distance 
calls. Records of these calls are initially recorded on 
punched paper tape or on machine readable tickets 
at a Traffic operating office through which the call 
is placed and most of the calls are then billed to 
customers by the closest customer billing office. 

There are special problems, however, in handling 
the 350 million collect and credit card calls made 
annually. The customer, for example, who makes a 
collect call from San Francisco to his residence in 
New York obviously wishes the call billed in New 
York but the record of the call is in San Francisco. 
The records of many of these 350 million collect and 
credit card calls thus must be transferred to a distant 
office for billing. Until recently these records were 
shipped by various means to the billing office. 

Today, however, several companies. Southern Bell, 
Bell of Pennsylvania and Pacific, are using a process- 
ing and communications system for transferring 
these calls between offices within their own com- 
panies. Records of the calls after certain initial proc- 
essing by the receiving office are transmitted over 
a data link to a central location which sorts the rec- 
ords by billing office and redistributes them to the 
appropriate accounting office, again over a data link. 

The result is one or more days saved in the billing 

The Mountain States and Ohio companies plan to 
implement similar systems and eventually the entire 
Bell System will be tied together in a Centralized Mes- 
sage Data System which will link the associated com- 
panies in a data transmission network which among 
other things will process the collect and credit card 
calls as described above for the whole System. 

Using bank communications 

To speed up the billing process, a plan for the auto- 
matic payment of telephone bills through banks is 
also being tried out in Southern Bell. Under this 
"Bank Draft Plan," the customer authorizes his bank 
to make payment directly from his account based on 
the billing drafts which the company provides to the 
bank. All of the drafts for a large area are prepared at 
one central location as a by-product of the billing 
operation. But instead of being mailed to the various 
banks, they are encoded and delivered to a central 
bank in the headquarters city, from which they clear 
through existing bank channels to the various drawee 
banks. In this way, the company does not have to 
maintain a balance in every bank. It's also significant 
to note that here the banks' communications system 
is being used rather than some other means. 

One other essential part of the billing process is to 
keep an up-to-date and accurate record of who has 
paid his bill so that unnecessary and sometimes 
embarrassing followups will be avoided. Processing 
centers for mail payments are, therefore, usually 
adjacent to a billing computer so that the pre- 
punched card the customer returns with his payment 
can be used immediately to update the computer, in 
Sioux Falls, South Dakota, however, the Northwestern 
Bell Telephone Company has an operation for 
receiving and processing customers' mail payments 
that is nearly 200 miles from the billing computer in 
Omaha, Nebraska. They solved the problem of 


updating the computer by transmitting the payment 
information twice each day to the Omaha computer. 

Let's turn now to the process we refer to as mobili- 
zation of funds — that is, the process of moving funds 
from where they first appear as checks or bank bal- 
ances to other accounts or locations where they can 
be used for disbursement. 

Although a variety of methods are used, most of 
them involve a combination of telephone company 
communications and those of the banking system, in 
those cases where the companies still use regular 
depository transfer checks (a type of check for trans- 
ferring funds from one bank to another), they have 
found they can speed up the issuance of these checks 
by having collection data telephoned into the Treas- 
urer's office as soon as receipts are deposited. More 
frequently used, however, is an arrangement for auto- 
matically transferring funds through a correspondent 
relationship with a bank in the headquarters city of 

Under the Bank Draft Plan used by Southern Bell, telephone bills 
are paid directly from the customer's bank account. The drafts 
shown above are prepared as a by-product of the billing operation. 

the operating company. In this case, the principal 
communications medium is one provided by the 

Turning finally to the matter of disbursement of 
funds, there are again many ways of doing this. One 
particularly interesting system, however, is being 
used by Pacific Northwest Bell. Special arrangements 
have been made with the banks in Washington and 
Oregon to accept teletypewriter messages originated 
by the company to effect the movement of funds be- 
tween banks. The Teletype message includes a special 
numerical code which has been agreed upon with 
the banks to establish validity of the message. With 
this system the company is able to direct a bank to 
transfer funds to New York, for example, for payment 
to Western Electric for equipment or for the payment 
of interest on debentures where the payment is de- 
posited in a New York bank. Funds, of course, can 
also be moved to cover drafts presented for payment 
and for other purposes. All of the transactions are on 
a same-day basis in current-day funds useable by the 
recipient on the day the funds are moved. 

The significant features of such a system are that 
register balances are reduced, no checks are required, 
communications are handled by a combination of 
regular telephone company facilities and those of the 
banking system, and all transfers are made on a cur- 
rent day basis. 

Here then is an instance where we're getting pretty 
close to some of the concepts we talk about in the 
banking and financial systems of the future. 

The future of money management 

And what about the future? What must we be pre- 
pared for as we move toward what has been called 
the "checkless" or "cashless" society? Will we scrap 
our present procedures and instead just hook every- 
thing up to some giant computer? 

Let me begin by stating some things I think will not 
happen. First of all, I think we will continue for a very 


long time to use such things as checks and cash. 
There are still some virtues to these things that are 
not readily served by even the fanciest computers and 
electronic circuitry. And I do not think that credit 
cards are going to take over as a 100 percent substi- 
tute for cash either. They serve a useful purpose for 
the individual who wants to defer and consolidate 
his obligations, but this procedure is not appropriate 
for all transactions. 

Having disposed of the conservative view, let's 
consider what might be possible with just our present 
electronic technology. It would be possible, for ex- 
ample, to hook up our telephone central office with 

More than 700 Bell System accounting centers, such as this one 
in Chicago, have the job ot keeping tabs on some five billion long 
distance calls and processing about 600 million bills each year. 

the bank's computers and charge the customer's ac- 
count without using any intermediary paper records. 
Or in the case of the transportation business, there 
might be a hookup between railroad and bank com- 
puters so that a customer's payments might be trans- 
ferred automatically wheneverashipmentis delivered 
or a passenger boards a train. Such schemes, though 
they undoubtedly will not have widespread appli- 
cation for a long time, would certainly represent the 
ultimate in instantaneous cash transfer. 

Somewhere between today's system, which in- 
volves delays of all kinds in processing and moving 
checks, and the system of tomorrow, which will in- 
volve instantaneous transfer of funds, lies a tremen- 
dous job of organizing systems of data processing and 
communications. If the world consisted of only one 
bank and one corporation, it might be difficult 


enough to do. But in today's society of many banks 
and many corporations, it becomes a tremendous 
task to organize even the simplest system. Consider, 
for example, what a big project it was to institute the 
Magnetic Ink Character Recognition (MICR) system 
for clearing checks. This was certainly a great step 
forward but one which took years to accomplish. In 
fact, only on September 1 of this year were the final 
steps taken by the Federal Reserve Bank to imple- 
ment the system. Exploiting the full potential of 
data processing and communications will take even 
more in the way of organizing and coordinating the 
work of diverse institutions. 

Who will lead this great organizing job? Perhaps 
the banks will. To the extent that they do, then corpo- 
rations will be able to depend on the banking system 
to not only receive and disburse funds but also, 
through forms of processing and communications, to 
handle more and more of the flow of funds all the 
way from customer to creditor. 

Communications should be simple 

But in all probability, most businesses will continue 
to require some communications capability of their 
own for managing their funds. If this is the case, my 
main admonition, at least as far as communications 
is concerned, would be to keep the system simple 
and flexible. This is because changes in the field are 
taking place at a highly accelerated rate. On the data 
processing side alone, more advanced systems are 
appearing so rapidly that many are obsolescent as 
soon as the hardware is installed. Obsolescence can 
come just as rapidly on the communications side and 
can be just as painful if the system is elaborate, 
expensive, and too closely locked into one method 
of operation. 

Cash management systems can make use of fairly 
simple communications media. Even the most sophis- 
ticated systems we have today got started by utilizing 
ordinary telephone lines. Other examples I've cited 

use communications arrangements ranging from tele- 
typewriter messages down through a service some- 
times called "POTS" — plain old telephone service. 
At the risk of seeming to "unsell" our most sophisti- 
cated and advanced services, I feel it best to empha- 
size how much can be done to expedite the cash 
management job with even the simplest forms of 
communications systems. 

In conclusion, it seems that some form of com- 
munications, simple and inexpensive as it may be, 
enters into every phase of the cash movement 
process. The form of communication may range from 
sophisticated data messages down to simply mailing 
and delivering a piece of paper. In addition, it is the 
means whereby a nationally organized corporation 
is able to do business in each city and town just as 
another merchant along Main Street. D 

Pacific Northwest Bell is using teletypewriter messages to speed 
up money movement. This enables them to keep most trans- 
actions involving disbursement of funds on a same-day basis. 



Statements of policy and opinion 

Editor's Note: John D. deButts, AT&T vice chairman of the board, recently spoke 
on "Industry Looks at Education" to the National Association of College and 
University Business Officers in New/ Orleans, La. Mr. deButts outlined the business 
world's expectations of higher education, stressing that "industry sees education 
in several lights, not merely-and not mainly-as a source of ideas that are critical 
of industry itself." A condensed version of his text follows: 

What does industry want academi- 
cians to teach their prospective em- 
ployees, managers, and future leaders? 

I hope to see educators produce 
more engineers who can write clearly 
and well, and more writers who can 
solve equations. 

That's a simple — perhaps overly 
simple — way of saying that some 
breadth of study, some grasp of fun- 
damentals in several disciplines seems 
more important than a head full of 
specialized knowledge that will be 
obsolete tomorrow. 

There is nothing wrong with en- 
couraging and developing special in- 
terests, but today's information will 
not do tomorrow's job. What is neces- 
sary is to have the perspective to sense 
relative values, and the quality of mind 
that will enable a man to develop 
relevant facts at the time when they 
will be useful. 

In terms I am sure you have heard 
before, business wants people who 
have the capacity and the desire to 
think, communicate, and grow. 

I would also like to emphasize the 
good old-fashioned word character 
— that is, the innate disposition and 
intelligence to discern what is right 
and the courage, the guts, to do it. 

In business these days many deci- 
sions have to be made that involve 
extremely complex considerations. 
You don't just look at a print-out 
from a computer and say, "That's it- 
let's go." Nor can you go back to the 
theoretical approach of the textbook. 

Theory is too often based on averages, 
and there is no average company or 
average situation in my business or 
yours. Theory must be the jumping- 
off point for judgment. I am reason- 
ably sure that you, like myself, in as- 
sessing what your business needs, may 
put the highest premium on "aware- 
ness" — a sensitivity to all considera- 
tions that have to be studied, ap- 
praised, and resolved — and not in- 
frequently resolved under pressure 
and in a hurry. 

Skeptical students 

It is clear to me from what I read 
that the current college generation — 
many of them anyway — are skeptical 
about business really wanting, or even 
deserving, sensitive and able men of 
high character. 

I am not inclined to discount the 
criticisms made of business. In the 
main I think they come down to these 
points — that the world of business is 
narrow and materialistic, and that it 
is not challenging but routine and 

We could argue pros and cons all 
day on the subject of narrowness and 
materialism. I am sure there is plenty 
of both in business as elsewhere — 
and also plenty of breadth and vision 
and self-sacrificing labor and public 

As to the notion that business, and 
especially big business, is so tightly 
structured, so defined in routine, so 
set in its ways that it lacks challenge- 

let's face it, there is truth in this criti- 
cism and we in business must continu- 
ously look for ways to inspirit people 
more effectively than we do. 

But having said that I also want to 
say, I must say to this college genera- 
tion, "Look, the world of business is 
just as full of excitement and chal- 
lenge and responsibility as anything 
you could ask for if a life of action 
and change appeals to you and if you 
really have the energy and ability it 
calls for." 

I have made two different com- 
ments. You may think they contradict 
each other. But 1 think there is room 
for both. We have tigers in our busi- 
ness who are continuously making 
their own excitement and challenge in 
spite of all routines. At the same time, 
there is always an awful lot more that 
any business can do and must do to 
keep its own bureaucracy off balance. 

One thing we have done increas- 
ingly in the Bell System in recent years 
is to pitch new candidates for manage- 
ment jobs directly into responsible 
tasks, without prolonged programs of 
routine training that offer little chance 
for meaningful work. This on the 
whole has worked well. The men who 
have the stuff like it and those who 
don't are not encouraged to keep pok- 
ing along in ways that would amply 
justify the sort of criticisms I've been 
talking about. 

There is clearly a strong desire 
among many of the younger genera- 
tion to contribute to the betterment 
of their fellow men. And there also 
seems to be some feeling that this can 
be done only through the Peace Corps, 
Vista, or other such programs. Busi- 
ness, many young people say, has no 
interest in the underprivileged, the 
uneducated, the unskilled, and seeks 
only to exploit them. 

Certainly there are instances of this 


attitude, but my experience teaches 
me that they are the exception and not 
the rule. Most businessmen I know 
are far from being insensitive to the 
human problems and tragedies around 
them. Their interest in working to alle- 
viate them goes well beyond what is 
called "enlightened self-interest." 

It is certainly true that improved 
family incomes provide larger markets 
for business and that training in work 
skills provides a better employment 
market. It is true also that open em- 
ployment and family rehabilitation 
hold down welfare costs and that civic 
and neighborhood improvement pro- 
grams improve the climate in which 
businesses operate. But the interest of 
businessmen in helping to build better 
communities has grown from much 
broader and deeper considerations 
than these. People in business want 
to help, and they take action to help, 
out of plain human feeling and the 
sense of brotherhood. If the students 
of today would shelve some of their 
prejudices and study the facts of pro- 
grams initiated and carried on by 
corporations, I believe they might rec- 
ognize and many might even want to 
share in the opportunities for serving 
the general welfare that they would 
find in business life. 

There is one question that we in 
business are coming to ask ourselves 
fairly often: "What are the professors 
saying about us today?" 

I am not trying to be facetious. Sev- 
eral things are evident. One is that 
higher education itself, the colleges 
and universities, are a principal com- 
petitor of industry in seeking to cap- 
ture the interest and devotion of 
young people as they plan their ca- 
reers. Another is that the professors 
have an advantage. They get first licks. 
They are there — quite properly — 
before we are. 

A third factor is the growth of the 
educational establishment in numbers, 
material resources and prestige. I 
rejoice that the country can afford this 
great development in education — can 
prepare more people for tomorrow's 
complex tasks — can pay educators 
salaries more nearly commensurate 
with their contribution. 

Teachers' special obligation 

But I have some earnest hopes as 
well. Most of them can be resolved 
in the simple statement that I hope 
the professors will be fair. Not that 
they would wish to be anything else— 
1 intend no such implication. But there 
is no escaping this fact— that the great 
majority of teachers, simply by reason 
of spending their lives as teachers, are 
not intimately and at first hand famil- 
iar with the facts of life in industry. 
It therefore seems to me that they are 
under special obligation to be sure 
their influence on young people with 
respect to industry is not based on atti- 
tudes wherein opinion fills a void un- 
occupied by facts. 

Every socially useful calling needs 
talent — the professions, teaching, sci- 
ence, the arts, government service — 
all these and industry too. I say only, 
let those in education who are so aptly 
situated in time and place to influence 
young people avoid like the plague 
any disposition to steer able minds 
and stout hearts away from business 
on grounds that business is unworthy 
of their interest. 

The continuing main job of industry 
is to translate an incredibly complex 
technology to the service of man. To 
do this well we shall need our full 
share of men of high intellectual at- 
tainment and moral commitment. If 
the power elite in education ever takes 
the view that the best and brightest 
minds should all go elsewhere, and 

business make do with what is left, 
the results will be disastrous — not 
alone for business, but for the profes- 
sions, the arts, education itself, and 
the nation. 

In our business we want to think of 
ourselves as partners with education, 
not rivals. We want to exchange views 
and increase mutual understanding. 
We have had quite a few meetings 
with distinguished professors from a 
variety of disciplines, and we expect 
to have more. 

It is often said that we in business 
don't do enough to "tell our story." 
The implication of this is that if a 
teacher doesn't know what is going 
on, it is somehow our fault for not 
telling him. 

I disagree with this. This is a two- 
way street and there is a need for ini- 
tiative from education also. So far, that 
initiative seems to be left largely to 
the business school professors and a 
few others in economics. 

I don't think this is enough and it 
seems to me that it might provide a 
welcome change of pace — and serve 
understanding as well — if among the 
celebrated novelists, poets, philoso- 
phers and public officials invited to 
share their wisdom in campus semi- 
nars and symposia an occasional busi- 
nessman might appear. Given the right 
man, it seems to me that exposing the 
students to an executive, who — per- 
haps to their surprise — turns out to 
be no less ethically committed than 
they and no less idealistic, but who 
must bear the consequences of his 
actions, could prove a stimulating ex- 
perience indeed. 

Finally, it just seems to me that our 
country has too many tasks yet un- 
done to permit us to tolerate barriers 
to understanding between two callings 
that must cooperate if we are to make 
a good future. D 



A peculiarly American phenomenon, industrial designers have influenced 

our living habits by improving the appearance and function of 

mass-produced products. One of the foremost designers gives his philosophy on 

Adapting Products to People 

During a career that has spanned nearly 40 years, 
Henry Dreyfuss has helped change the shape, color, 
and performance of countless products. As a consult- 
ant to Bell Telephone Laboratories since 1930, he has 
had a hand in the design of almost every Bell tele- 
phone as well as related products. From his drawing 
board have also come designs for television sets, air- 
plane interiors, cameras, bathroom fixtures, gasoline 
service stations— even bowling alleys and flyswatters. 

One of the original "big three" of industrial design 
(Raymond Loewy and the late Walter Dorwin league 
were the other pioneers in the field), Mr. Dreyfuss 
helped translate Louis Sullivan's principle that "form 
follows function" from architecture into industrial 
design. What he and other designers did was to dem- 
onstrate to American manufacturers that good design 
could be a "silent salesman" extolling a product's 
utility and other values. 

Mr. Dreyfuss, who was once referred to as an apos- 
tle of human engineering, built his reputation on the 
belief that people are the most important considera- 
tion in designing a product. Displayed on the walls 
of his New York and California offices are line draw- 
ings of human figures (dubbed "Joe" and "Josephine") 
that describe in infinite detail the physical dimensions 
of "Mr. and Mrs. Average American." These anthro- 
pometrical studies have helped determine the height 

With silent partners, "loe" and "losephine," in the background, 
Henry Dreytuss talks about designing for people. 

and shape of a chair, the length of a vacuum cleaner 
handle, and the size of a telephone handset. 

Mr. Dreyfuss, whose list of clients is limited to 15 
at a time, is also a firm believer in personal research. 
In the course of his work he has done everything 
from running a diesel locomotive to operating a tele- 
phone switchboard. 

A seemingly tireless man whose solemn appearance 
belies a lively wit, a long-abiding interest in the thea- 
ter, and a passion for unusual gadgets, Henry Dreyfuss 
can look back on a career filled with honors and 
awards. He is more concerned, however, with look- 
ing to the future. Where industrial designers were 
once concerned mainly with a better looking or bet- 
ter acting product, they are now deeply involved in 
long-term planning, sometimes working on products 
for use 10 to 20 years from now. 

It was while enjoying a brief vacation in Mexico 
that the request to do an article for Bell Telephone 
Magazine reached Mr. Dreyfuss. "My first impulse," 
he said, "was to put off your request until I returned 
to civilization— but on consideration, I realized how 
seldom I have an opportunity for uninterrupted 
thought. This holiday gave me a chance to ruminate 
and put down ideas about design that continually 
run around in the back of my head but are normally 
crowded out by more immediate problems." 

On the following pages are the ideas— some new, 
some elaborations on old ones— as Mr. Dreyfuss ex- 
pressed them. 


Adapting Products 
to People 

by Henry Dreyfuss 

How do you start a product design? First, we take 
a look at those men, women, and children who will 
be using the product. In every way, we try to put 
ourselves in the place and environment of the user. 
We interest ourselves not only with dry anatomical 
dimensions, but also with matters concerning the 
senses — what colors, textures, sounds, and smells 
either please and attract or annoy and repel. In the 
words of our office creed: 

"We bear in mind that the object we are working 
on is going to be ridden in, sat upon, looked at, talked 
into, activated, operated, or in some other way used 
by people." 

Anyone who has worked with us knows that our 
every line is dictated by two anthropometrical silent 
partners, "Joe" and "Josephine." They have physical 
dimensions determined by a physician, sight charac- 
teristics supplied by an opthalmologist, hearing capa- 
bilities furnished by an otologist. We also know a 
good deal from psychologists and psychiatrists about 
how Joe and Josephine will act in periods of relaxa- 
tion or strain. 

To what Joe and Josephine tell us about the design 
of the product we add our knowledge of materials, 
manufacturing, marketing, and what we know about 
proportion, line, color, and texture. Many forms and 
functions are integrated into what we trust will be a 
pleasing and acceptable whole. 

If we have worked closely with our client's engi- 
neers and been constantly guided by our technical 
knowledge, the product should be capable of being 
manufactured within budget and sold for profit. 

Perhaps we could say the industrial designer acts 
as the product's conscience. 

Life with engineers 

Our best friend and sincerest critics are engineers. 
It is inconceivable that an industrial designer could 
develop a product without the closest cooperation 
of the client's engineers. They are the wings on which 

During a vmt to Bell Telephone Laboratories, Mr. Dreyfuss checks 
on the progress of a new telephone design. 

an idea can be borne into reality. 

We have had the rare privilege of working with 
great engineers. Our experience has been that the 
greatest seldom say "No"; invariably they are stimu- 
lated by the seemingly impossible and say, "Let's try." 

There was a time, however — and it wasn't too long 
ago — when an engineer resented an industrial de- 
signer's appearance on the scene. "What can he do 
that I can't do?" the engineer asked. "What's he got 
that I haven't got?" As a consequence, the industrial 
designer found himself struggling mightily to con- 
vince the well-established engineering groups that 
he had a valuable point of view to contribute. Unlike 
many engineers, the industrial designer did not read- 
ily accept the restrictions of material and machine. 
Or at least he accepted the restrictions as a challenge, 
and stimulated the engineers to do handsprings to 


develop superior means of fabrication, use new ma- 
terials, and find new uses for old materials. 

For example, the swift and great advances made 
in plastics — as well as their universal acceptance — 
may be attributed to the teamwork of engineers and 
industrial designers. We demanded a stronger ma- 
terial that was stable and durable, and the supplier 
rose to the occasion and delivered it. With a magical 
capacity to produce nearly anything demanded of 
them, plastics have liberated the form and shape of 
things. In turn, they have forced on the supplier new 
and improved means of fabricating older, competi- 
tive materials. So all have profited. 

How do you know you are right? 

Certainly industrial designers do not have any spe- 
cial clairvoyance. But we do have past experience and 
past performance, which adds up to something we 
have dubbed an "educated hunch." 

Objectively and vigilantly, the industrial designer 
studies the consumer for whom the product or serv- 
ice is being designed. What is the man in the street 
reading? What artist is he currently admiring? To what 
rhythms is he tapping his foot? Is his imagination 
being stirred by the promise of a bat-winged super- 
sonic plane, or are the wonders of the deep sea awak- 
ening his soul? Is there a new movie queen on the 
horizon? Has the primitive African culture invaded 
our intellect? Answers to all these questions — and 
much more— will help the industrial designer disci- 
pline his thinking on the shapes of things to come. 

So many things in science and industry are meas- 
urable. But there are no known formulas for taste; 
it cannot be proven by numbers. Taste is nebulous, 
indefinable, nondetectable. It is probably an ecto- 
plasm that experience alone can satisfactorily gather 

Unlike science and engineering, you cannot prove 
the excellence of a good design. No equation has 
been written for good taste. 

Multiplication of error 

A designer for mass-produced merchandise is for- 
ever terrorized by the fact that any mistake will be 
produced and reproduced by the thousands or mil- 
lions once the drawings are released, the tools made, 
the unrelenting machines started. Before the first ad- 
vertisement appears, distribution pipelines must be 
filled. And by the time the stocking of warehouses 
has been completed, there is no chance for correc- 
tion. The point of no return has been long passed. 

On the other hand, there can be no greater reward 
than to have those same machines turn out millions 
of an acceptable product. A well-designed product 
inevitably raises the level of consumer taste. This in 
turn conditions the consumer to exercise his im- 
proved taste the next time he goes shopping. Thus, 
by raising the level of public taste, the industrial de- 
signer has acquitted himself of a major responsibility. 


'«9>40 40 419 *d» 

Each year, millions of telephones are turned out by Western 
Electric. The mass production of a well-designed product, Mr. 
Dreyfuss says, is a designer's greatest reward. 


Designer for the future 

When a painter, sculptor, writer, or musician com- 
pletes his concept, it is immediately ready for pres- 
entation to the public. Often it becomes a timeless 
contribution to our heritage. 

With the industrial designer, it's different. Given 
the task of having to make a particular contribution 
to industry, we have to discipline ourselves to pro- 
duce for the future. Depending on its magnitude, it 
generally takes a product from two to seven years to 
movefrom drawing board to marketplace. First comes 
the call for a new product; then comes the incuba- 
tion period for inventors, the engineering, the indus- 
trial designing, the prototypes, the market testing, the 
tools, the retesting, the production and the distribu- 
tion. And, of course, all along there are time-con- 
suming trials and errors, occasional disappointments, 
and a few headaches. 

In our presentation to clients, we must direct their 
attention to the future. We must demonstrate that, 
if the design being presented were acceptable today, 
it would be out of date two to seven years hence. We 
have to convince them that the seemingly "way-out" 
model we are showing them will not be way-out by 
the time it meets the consumer in the marketplace. 

The computer and the industrial designer 

It is hard to think of one single thing that has not 
been affected by the advent of the computer. Cer- 
tainly the industrial designer has felt the quickening 
impact of that magic brain. It used to take weeks, 
even months, to answer technical questions, prove 
strength analysis of materials, translate market re- 
search. The computer does it instantly. 

A part of the computer input of the future would 
be up-to-the-second vital statistics — or perhaps a 
government standard on anatomical information. It 
will become common for computers to verify the 
dimensions on drawings of all things used by people. 

Computers should also help architects and indus- 
trial designers solve the thorny problem of selecting 
the right materials and components from the many 
available. Sweet's Catalog, the bible of our profes- 
sion, grows more ponderous with the addition of 
every wonder. Eventually a similar catalog will be 
committed to computer tapes, with new data added 
on the hour. A phone call will give us a selection to 
meet our specifications. 

But I question that a mechanical device can ever 
be truly creative. Granted that all combinations of 
all musical notes may be put on tape, who will call 
the opening chords of the Fifth Symphony into being? 
Even with all the curves and angles recorded, who is 
going to summon up the sweep of a staircase or the 
proportions of a fine chair? It will take a man with 
taste and perception, not a machine. However, if 
the computer will not make us better composers, 
architects, or designers, at least it will make us faster 
ones. We must learn to use it as a tool and with abso- 
lute discretion. It can be a great servant, but we must 
protest its being a runaway master. 

For the most part, people seem to resent change. 
Although the younger generation goes in for "mod" 
clothing and a new tune every day, most of us are 
reluctant to shift gears. We are afraid to rock a 
smooth-sailing boat. 

Often when a new design is presented, everyone 
comes to the defense of the current model. Yet when 
it was first shown, the current model was ridiculed 
in favor of the product then being manufactured. It 
seems we breed purple cows and are reluctant to 
topple these successful idols from their pedestals. 

But although industrial designers are in the busi- 
ness of change, we resent planned obsolescence. 
A change in technology, improved efficiency, addi- 
tional safety or comfort, a new utility development, 
an improved method of fabrication, the introduc- 
tion of a new material — these warrant a new physical 
expression. But to put a "new look" on an existing 


piece of merchandise — this, to us, constitutes the 
duping of an unsuspecting public. 

We say that a design expresses the excellence of 
its engineering and reflects the integrity of its manu- 
facturer. That hardly suggests a seasonal change. We 
are not in the profession of style or fashion. Ours is 
a basic approach; our designing must be generic by 
nature. If the most contemporary of design can be 
called "classic," then call us classicists. 

On creativity 

One of the best stories I know on creativity has to 
do with Edwin Land. While in Santa Fe on vacation, 
Land was taking snapshots of his family with a stand- 

ard camera. His little daughter wanted to know why 
she couldn't see the pictures right then and there. 
Walking around town. Land kept thinking: "That's 
a good question. Why can't you?" 

As he recalls it now, "Within an hour, the camera, 
the film, and the physical chemistry became so clear 
to me that — with a great sense of excitement — I 
hurried over to the place where our patent attorney 
was staying (in Santa Fe by coincidence). I was able 
to describe to him in great detail a dry camera, a 
camera that would give you the picture immediately 
after you snapped the shutter." 

This ties in with a theory I have developed. Within 
each of us is a memory tube in which everything we 

Working with 3 young staff member in tiis New York office, Mr 
Dreyfuss suggests some design changes. "The public today," he 

once said, "is getting better designed goods than the wealthy got 
forty years ago in made-to-order products." 


see, hear, feel, taste or smell is recorded on its inte- 
rior walls and stashed away for future reference. The 
tube may be compared to our grandfather's rolitop 
desk in which information was neatly pigeonholed 
or to a modern computer in which all the input is 
ready to be called out. 

Clinging to the walls of the memory tube are bil- 
lions of little "experience blips" — the first sensation 
of pain, the smile of a teacher, the whistle of a train, 
the lights of Times Square, the taste of peanuts or 
caviar, the harmonics of a Brahms' symphony, 20 
giraffes galloping in front of an oversized moon. 
What does it matter? It's all there, all of these expe- 
riences, many of them unknowingly absorbed. How 
many of these blips there are and how vivid they are 
depends on how astute our observations have been. 

Let's say that suddenly we have an inspired thought 
and that it has a dire need for enlargement. We drop 
this request for aid into our tube. Down it spins, 
extending antennae which attract idea particles (the 
experience blips), if the particles are pertinent to 
the need, their contribution is accepted and then 
the blip is put back for use another time. By the time 
the idea has spun the length of the tube, all of our 
past experiences, our remembrances, good and bad, 
have offered their contribution. Our real creativity 
relies on how well we have stored the knowledge, 
on our perception in retrieving it, once we need it, 
and on our ability to synthesize it for use in the proper 
proportion. With a little bit of luck, good ideas may 
thus be born. 

No one has proven what makes for creativity. But 
fortunate is the creator whose experience and knowl- 
edge can substantiate his dreams. Particularly fortu- 
nate is the creator who can direct his far-flung 
thoughts into a productive channel. D 

The evolution of a product design requires close cooperation 
w/t/i the client. Here, Mr. Dreytuss reviews future plans with 
members of Bell Laboratories' customer equipment development 
group at Holmdel, New jersey. 



the promise in a beam of light 

Scientists learned to manipulate matter and energy 

at the atomic level - and produced the laser, one of this century's 

most important technological achievements. In the few years 

since its inception, the laser has proliferated into many 

forms, directed to diverse uses in science, medicine and 

manufacturing. At Bell Telephone Laboratories, where it was 

invented, the laser is proving to be a powerful and versatile 

research tool. Scientists there are also exploring its 

potential as a communications medium. The following pages 

give a pictorial sampling of laser development at Bell Laboratories. 

Crystal modulates 

laser beam in on-off pulses 

for experimental working 

model of high-speed 

information storage system. 

Laser beam is "folded" 

— reflected back and forth 

between mirrors — as shown 

by H. A. Stein in this 

demonstration. This forms 

an optical delay line 

from which information 

carried by beam can be 

retrieved after a maximum 

of 10 millionths of a second. 

Solid state laser emits 

bursts of infra red light in 

trains of W to 20 pulses; 

entire train lasts only 

one 50-millionth second, 

has peak power of more 

than TOO million watts. 

Bell Labs' scientists 

at Murray Hill have 

generated world's 

shortest pulses (less than 

one picosecond) and 

devised technique to 

measure them. Pulses 

provide a "yardstick" of a 

size compatible with events 

on the atomic scale and 

enable scientists to examine 

motions of molecules in 

liquidf and solids. Picture 

shows invisible laser beam 

hitting crystal, which 

converts infra red to 

brilliant green spark. 

Somewhat similar technique 

involving a non-linear 

effect permits measurement 

of pulse widths 

Experimental laser 

communications transmission 

system uses gas lenses 

to focus beam. This 

pilot model operated by 

H. W. Astle, aimed at 

development of an eventual 

4,000-mile line, uses 

ordinary air in each 

"lens"; by varying rate 

of air flow through heated 

tube centered inside 

sections of copper pipe, 

beam can be focused 

Invented at 0<H 'J 

oratories, the : 

can keep /a>' ■ " ,m; 

focused sharply over 

distances with almost no 

loss in energy, which 

is not possible with 

glass or quartz optics. 

5. P. 5. Porto at Bell's 
Murray Hill, N. /. lab 
investigates the effect 
of argon laser coherent 
light on molecular 
behavior of crystals. 
The known single frequency 
of laser beam enters 
the crystal, which emits 
a different frequency as 
a result of molecules 
in the crystal moving 
in certain patterns. 
Double spectrometer 
designed by Dr. Porto makes 
accurate analysis possible. 
"With the laser," he says, 
"we can do now in half 
an hour what used to 
take us weeks." Here, 
the argon laser's intense 
blue-green beam impinging 
on a synthetic ruby 
produces beauty seen only 
in the laser laboratory. 



Dr. Dellet Colge, k 
experiments with /; 
as a communicatioi 
system at Bell Labs 
Holmdel, N. I. Lase. 
is modulated in pul 
then sent out throu 
400-meter undergrc 
pipe line and "loldi 
simulated 120-kilor 
system. Experiment 
system studies prot 
ol light transmissioi 
over long distance: 
How to guide bean 
corners without toe 
energy loss, how to 
distortion; how to ( 
with temperature c 
and shifts in surrou 
earth; how laser be 
act when sent over 
long distances. 

Experiments with 
articulated arms - 
"light knile," origin 
designed as a surg/c 
instrument — may h 
to a manufacturing 
in the fine cutting o 
thin film circuit pla 
Flexibility ol arm ca 
argon laser beam w 
it is needed, follow, 
movements of micr 
or other tool as den 
strated by A. M. joh 
at Murray Hill lab. 
A slight scattering o 
beam at each reflec 
prism illuminates 
joints of the arm. 



■ p\^^^^^^^i 

1 ^^^BP^M 



Bell Telephone Hour Honored 

The American Symphony Orchestra 
League, in cooperation with the Cali- 
fornia Arts Commission, has awarded 
its Gold Baton to the Bell Telephone 
Hour television series "in recognition 
and appreciation of its generous and 
imaginative exploration of the world 
of music." The presentation was made 
in Los Angeles as one of the highlights 
of the 1967 National Conference of 
the Orchestral Association. 

The Bell Telephone Hour returns to 
the air for its 28th season this fall, and 
will be seen every third Friday at 
10 p.m. (Eastern Time) on NBC. Pro- 
grams will feature such artists as Duke 
Ellington, Yehudi Menuhin, George 
Plimpton and the New York Philhar- 
monic Orchestra, Zubin Mehta and 
the Los Angeles Symphony Orchestra, 
as well as the sights and sounds of 
Chicago and the Bach Festival of 
Bethlehem, Pennsylvania. 

Beautifying with Buried Cable 

The Bell System program to bury all 
telephone cable serving new residen- 
tial areas has accelerated dramatically 
since 1955 when buried cable served 
only 2,000 new construction units. 
Last year, the figure jumped to 
637,000 and this year could reach 
750,000 — meaning that over 60 per 
cent of all new units in the nation will 
be served by buried cable. 

The success of the program is due 
largely to such Bell Telephone Lab- 
oratories innovations as the develop- 
ment of a moisture-resistant plastic 
insulated conductor cable and several 
new tools and methods for burying 
cable. The most recent development 

is a compacting auger that tunnels 
under lawns, streets, and other ob- 
stacles at eight feet per minute with 
minimum public inconvenience. 

In addition to beautifying the area, 
buried cable is not as susceptible to 
storm damage as aerial wire, an ad- 
vantage which means less interruption 
to telephone service. Though under- 
ground cable is sometimes cut acci- 
dentally, phone companies are reduc- 
ing these mishaps by asking builders 
and homeowners to check cable 
locations with them before digging. 

The Bell System buries cable in all 
new areas when technically and eco- 
nomically feasible. Essentially all new 
subdivisions are expected to be served 
with underground cable by 1970. 

A Better Electron Tube 

A modified electron tube — the "416 
Planar Triode" — now being manu- 
factured by Western Electric shows 
excellent promise of helping to dou- 
ble the capacity of most radio relay 
systems. The tube's output capability 
has been more than doubled by the 
insertion of a ceramic insulator, which 
replaces the glass insulation used for 
the past 17 years. The new tubes are 
presently being field tested in an ex- 
isting radio relay system from Adams, 
Texas, to Hardy, Oklahoma. 

Lab to Become Artist Colony 

Bell Telephone Laboratories' former 
headquarters on New York's lower 
west side will soon be converted into 
a colony housing some 500 painters, 
sculptors, and other artists, due to the 
combined efforts of the J. M. Kaplan 
Fund and the National Council on the 


Arts. The eight-building site, which 
housed Bell System research and de- 
velopment facilities from the turn of 
the century until last year, will soon 
be sold by Bell Labs for $2.5 million. 
When completed in early 1969 at a 
cost of $10 million, the center will 
become the nation's heaviest concen- 
tration of artists and the first of its 
kind in the United States. 

New calling services tested 

Several new Custom Calling Services 
will soon be offered to most Bell Sys- 
tem customers as the result of suc- 
cessful market trials in Wellesley, 
Mass. and Sioux City, Iowa. The new 
services include Call Waiting, Call 
Forwarding, Speed Calling, and Three- 
way Calling. 

In Call Waiting, a short tone signals 
a person already talking on his phone 
that another party has dialed his num- 
ber. He may then depress the button 
on the handset cradle, "holding" the 
first call while he answers the second. 

Call Forwarding enables a person to 
transfer all incoming calls to another 
number in the same calling area by 
dialing a special code on the originat- 
ing telephone. Speed Calling allows 
calls to a list of eight frequently called 
numbers by dialing one digit, instead 
of the usual seven or ten digits. 

Threeway Calling permits a third 
party at another number to be added 
to a call already in progress. The per- 
son originating the call may "hold" 
one called party on the line while 
dialing another, then hold a private 
conversation with the third party be- 
fore establishing the connection for a 
three-way conference. 

New Portable Phone Developed 

An experimental lineless extension 
telephone — a battery-operated porta- 
ble unit that performs the major func- 
tions of a regular telephone set — will 
soon undergo field trials in the Boston 
and Phoenix areas. The unit connects 
via a radio link to a fixed station 
which, in turn, is connected to a tele- 
phone line or extension in the regular 
telephone network. 

Unlike walkie-talkies and push-to- 
talk telephones, the new cordless tele- 
phone provides simultaneous two-way 
conversation, as well as dialing and 
ringing. Designed to be carried on a 
belt or in an overcoat pocket, the 
phone now has a range of from 100 
to 1500 feet from the fixed station. 

The new phone is expected to be 
most useful in such locations as a con- 
struction site, on a convention hall 
floor, or in other situations that re- 
quire temporary service, particularly if 
mobility is needed or if running tele- 
phone wire would be difficult. 

Overseas Calls Improved 

The transmission quality of overseas 
telephone calls will soon be con- 
siderably improved with new high fre- 
quency radio equipment developed 
jointly by Bell Telephone Laboratories 
and the British Post Office. The equip- 
ment, which has been successfully 
tested between New York and Buenos 
Aires, performs almost as well under 
normal atmospheric conditions as 
modern coaxial ocean cable. During 
unfavorable conditions, the system 
performs better than conventional 
shortwave circuits. The new equip- 
ment reduces fading and noise. 

Information Service Demonstrated 

A new service which permits students 
and teachers to have telephone access 
to a library of recorded information 
was demonstrated at the American 
Management Association's recent Edu- 
cation and Training Exposition in New 
York City. 

The service, which will be offered 
to schools and colleges this fall by the 
Bell System, will enable students and 
faculty to call the school's "resource 
center" and hear recordings on a wide 
\ariety of subjects. 

At the AMA meeting, the Bell 
System also demonstrated a special 
system which will permit educational 
institutions to offer a program of talks 
and discussions during the day or eve- 
ning. Students would be given sched- 
ules indicating the times they can 
hear a recorded lecture by telephone. 
Live lectures can also be made avail- 
able this way and, when feasible, per- 
mit students to question the lecturer 
by telephone. 


Appointment to Cambridge 

A Bell Telephone Laboratories phys- 
icist, Dr. Phillip W. Anderson, has 
been appointed to a new chair of the- 
oretical physics in the Cavendish Lab- 
oratory at Cambridge University for 
the next three years. He u'ill alternate 
between half a year of teaching and 
research at Cambridge and half a year 
of research at Bell Labs. This is the 
first part-time professorship awarded 
in the university's history, though sev- 
eral Bell Labs scientists have similar 
arrangements at U.S. universities. Dr. 
Anderson was also recently elected to 
the National Academy of Sciences in 
recognition of his distinguished 
achievements in original research. He 
joined 11 other Bell Labs members in 
the Academy. 

High School Science Aids 

As it has done since 1961, the Bell 
System is once again offering a pro- 
gram of science aids to the nation's 
high schools. 

Designed to help teachers present 
important fundamental concepts in 
the physical sciences, the Bell System 
room unit that is intended to fill in 
where textbook and teacher informa- 
tion is incomplete or outdated. These 
units, which generally include a text- 
book written by a Bell Telephone 
Laboratories scientist, cover a broad 
range of subjects and take advantage 
of new knowledge gained from recent 
Bell Laboratories research. 

The other teaching aid is a self- 
contained science experiment for 
students who are capable of doing 
more advanced work. 

Since the inception of the program, 
nine teaching aids have been devel- 

7/1/5 small tank is a precision apparatus 
which enables students to grow crystals in 
the classroom, CrYstallography is one of the 
subjects covered by Bell System science aids. 

oped, covering such topics as similar- 
ities in wave behavior, ferro-magnetic 
domains, speech synthesis, and crys- 
tallography. Much of the material in 
the kits is offered at no cost while the 
rest can be obtained from outside 
concerns at nominal prices. 

About 88 percent of the nation's 
physics teachers are aware of the Bell 
System program, a recent survey 
points out, and two out of three of 
the teachers surveyed are using the 
science aids in their classrooms. 

Weather Warning System 

Within a few years, a tornado brewing 
in Kansas will hardly have a chance to 
form before an alert is being flashed 
across the country. 

The reason: ESSA (Environmental 
Science Service Administration), a 
Teletype weather warning system 
developed by AT&T and the U. S. 
Weather Bureau. ESSA was introduced 

last year with circuits in Indiana, Ken- 
tucky, southern Illinois, and eastern 
Missouri. Iowa has since been added 
to the network, and by the end of the 
year, 13 more states and parts of four 
others will join the weather warning 
system. All of the states, which in- 
clude most of the midwest, south, and 
southwest, are rated as "highest 
tornado frequency areas." 

The system already has 105 weather 
bureau stations which can send and 
receive storm warning information, 
and by 1970, all 48 mainland states 
will be linked into ESSA. 

Since the main function of the sys- 
tem is to warn the public in advance 
of tornadoes, hurricanes, and other 
potential natural disasters, the federal 
government is encouraging mass 
media to connect into the system. As 
a result, more than 700 newspapers, 
television and radio stations are now 
equipped with receiving Teletypes, 
and many more are expected to be 
tied into ESSA when it becomes 

Although barely in operation, the 
system has already been credited by 
an Iowa meteorologist with alerting 
people to a recent series of storms 
which might have cost many lives. 

Wild Life Preserve Created 

AT&T Long Lines Department has 
leased for ten years without charge a 
2,500-acre tract at Manahawkin, New 
Jersey, to the U.S. Bureau of Sports 
Fisheries and Wild Life. The area is 
now officially a wild life sanctuary. 
A natural habitat for geese, heron and 
other wild birds, the sanctuary will not 
affect the use of Long Lines overseas 
transmission facilities on the land. 


'This invention of yours 

will create forgetfulness in the learners' souls 

because they will not use their memories... 

they will appear to be omniscient, 

and will generally 

know nothing." 

. from Plato's Phaedrus 

Thus spoke the Egyptian god, Thamuz, 
to the inventor of the alphabet. 

Just as controversial— yet perhaps 
even more innportant to the future of 
education— is a more recent innovation: 
the development of nationv^^ide 
information centers and learning labs . . 
linked together by the nationwide 
complex of Bell System communications. 

And w/hat more natural a development? 

For education must keep pace w\tU 
the community in which it exists. 
And, as one of the nation's leading 
educators recently pointed out: 

"On this threshold of another great age 
for the humanities, the entire human 
community is being made into a global 
neighborhood and an interacting whole," 

Linking the nation in education 




American Telephone and Telegraph Company 

195 Broadway, New York, N. Y., 10007 212 393-8255 

Bulk Rate 
U.S. Postage 


Washington, D.C. 
Permit No. 43083 

57-08698-M OL 15 , ^^^ 







November/December 1967 


Telephone magazine 






The Persuasive Influence of Chemistry 
Page 28 

An editorial 

Regulation and Great Enterprise 

in a recent speech before the Economic Ciub of New Yori<, 
AT&T Board Cliairman H. /. Romnes discussed the impact 
of regulation of business on the economic iife and general 
welfare of the nation. IHis comments on the relationships of 
regulation to business exercise of its social responsibilities 

I don't believe urban problems will be solved or will 
even be greatly ameliorated by government alone. 
I do believe the active participation of private busi- 
ness is essential and can be and will be influential. 

But it costs money, there is no doubt about that. 
For example, it will cost a lot of time, energy, and 
money to develop methods for training and employ- 
ing people who in past times would not have been 
considered for employment. The best way to encour- 
age expenditures for such purposes, in my belief, is 
to give the regulated enterprise a certain latitude, a 
little elbowroom, let us say, that will influence man- 
agements to do what they know they ought to be 
doing. In the alternative— if a management is forced 
to act under strongly restrictive constraints— the ten- 
dency is bound to be toward concentrating on meas- 
ures that will show immediate results. Wise action 
of longer range tends to be deferred. 

Now, there is surely immediate and pressing need 
for action to meet the commingled problems of pov- 
erty, education, racial strife and Negro unemploy- 
ment. But the immediate effort and expense entailed 
do represent a long-range investment in tomorrow, 
and to undertake it business managements must feel 
that they have the requisite freedom to act. 

While this is more than a matter of self interest, 
it is certainly that as well. The good health of the 
telephone business, for example, is unquestionably 
wrapped up in the good health and vigor of develop- 
ing urban life. Effective action on our part to help 
solve the problems and evils that threaten the cities 
is vitally important to our future as a business. 

But this is not to say to a regulatory commission, 
"When we incur expense in this effort, please keep 
us whole." That would simply duck responsibility, 
as does any cost-plus approach. My point and my 
plea are just the opposite— that in the case, for ex- 
ample, of regulated business, managements should 
have open to them the latitude demanded for the 
exercise of judgment, choice, innovation, decision 
to save, decision to spend: in short, the range that 
requires us to accept all the responsibilities of man- 

I can't refrain from restating my conviction that if 
industry is to accomplish its potential— if our enter- 
prise is to be enterprise-plus, so to speak, rather than 
cost-plus— if we are to have, in fact, what 1 want to call 
great enterprise— this basic need for reasonable lati- 
tude and freedom will have as powerful an influence 
on the future as it has always had in the past. 

In the last analysis our concern is to motivate 
people . . . The great responsibility of all regulation, 
it seems to me, is to get its job done through a process 
of encouraging people. The challenge here is really 
no different from that which confronts management 
itself— and it is equally difficult. The needs of people 
must be fulfilled. This is vital to them personally and 
to the quality of all work. D 


telephone magazine 


Leighton C. Gilman, Editor 

Donald R. Woodford, Managing Editor 

AI Catalano, Art Director 

Edwin F. Nieder, Assistant Editor 

Richard R. Draper, Assistant Editor 

H. I. Romnes, Chairman of the Board 
Ben S. Gilmer, President 
John D. deButts, Vice Chairman 
Charles E. Wampler, Secretary 
John |. Scanlon, Treasurer 

On Ihe cover - Pholo-chcniisir\ 

crosses ihe boundaries of se\erdl 

chemical physics and organic and r 

shows dyes emitting light due to e> 

ultraviolet, or "black light." This i 

Laboratories scientists believe occur 

ethylene, are exposed to light. Such 

can be added to polyethylene durir 

effects of light on plastic cable sheaths. For an insight into the pe 

ence of chemistry see page 28. 

MM h at Bell Telephone Laboratories 
0(ilines: physics, physical chemistry, 
-organic chemistry. The cover picture 
ition of their molecules by long-wave 
lion in the dyes simulates what Bell 
hen certain plastics, particularly poly- 
earch may help develop materials that 
nanufacture to reduce the destructive 

2 The Changing Role of the 
Telephone Operator 

8 The Growing Importance of Human Ecology 

by Lawrence E. Hinkle, Jr., M.D. 

12 Art and Science: Two Worlds Merge 
20 Bell Forum 

22 Communicating Presidents 

by Merriman Smith 

28 The Pervasive Influence of Chemistry 

by James C. G. Conniff 

35 Bell Reports 

Published by 

American Telephone and Telegraph Company 

195 Broadway, New York, N. Y. 10007 212 393-8255 

The Changing Role 
of the Telephone Operator 

New technology and new operating procedures have altered 

almost all aspects of the job of the telephone operator. 

What has not changed is the role operators play 

in the sympathetic handling of emergency calls. 

"I'm so sick," the woman's voice on the other end 
of the line said. 

When Mrs. Linda Taylor, a Richmond, Virginia, 
telephone operator heard these words, she knew this 
was not another routine call. 

The caller, who had suffered a stroke was only able 
to give her name and that of her doctor, but it was 
enough for Mrs. Taylor and her supervisor, Mrs. 
Norma Harris, to go on. Keeping the line open to the 
stricken woman, they called the doctor, only to learn 
he was not in. His nurse, however, was able to supply 
the address and an ambulance was dispatched. 

The two operators then located the woman's hus- 
band at work and told him his wife was being taken 
to a hospital. Mrs. Taylor, meanwhile, was still trying 
to comfort the woman when she heard a man's voice 
on the other end. A member of the rescue squad that 
had been dispatched to the scene said he found the 
woman on the floor, unable to get up, but fortunately 
within reach of a telephone. Although in critical con- 

dition, she was rushed to the hospital in time to save 
her life. 

An isolated example of a quick-thinking operator 
aiding a person in distress? Hardly. Each year, the 
first action nearly 15 million people take when they 
need help is to grab a telephone to dial "zero" for 
Operator. More than 40,000 times a day. Bell System 
operators receive frantic calls for aid from the sick, 
injured, helpless and frightened. Operators, often 
working in teams, have guided these callers to doc- 
tors, police and fire departments, relatives and clergy. 
Or, as in Mrs. Taylor's case, they quickly summoned 
the help that was needed. 

The task that Mrs. Taylor and her supervisor per- 
formed is neither unusual nor unlike similar action 
that operators have taken since Emma Nutt became 
the first woman telephone operator back before the 
turn of the century. 

And yet, in spite of the heroic efforts of operators, 
actually the best way to get help in an emergency is 

New traffic service positions reduce the time an operator spends 
on a call since equipment handles routine phases of a call. 

through a direct call, be it to the police, fire depart- 
ment, doctor, or whatever person or agency is 

Because of the operator's ability to keep lines open, 
route calls, identify calling numbers, and otherwise 
provide assistance, dialing her serves as a good back- 
up procedure to follow when the number for the 
specific agency needed is not readily available. 

Recognizing their obligation to provide effective 
communications in emergencies. Bell System opera- 
tors have acted as "midwives" to expectant mothers, 
assisted people stricken with heart attacks or injured 
in accidents, given instructions on mouth-to-mouth 
respiration, helped catch prowlers, and located lost 

This dedication to serving the personal communi- 
cations needs of individuals is about the only facet 
of the operator's job that has not changed in recent 
years. There are so many changes taking place in the 
operator's job today that it is difficult to compare 
her job with the familiar stereotype of yesteryear. 

Although she is no longer able through personal 
knowledge of a customer's whereabouts to tell an 

Overseas operators at traditional switchboards now dial directly 
to telephones in seven European and five Asiatic countries. 

individual that the person he is calling is visiting down 
the street, today's telephone operator has, in many 
ways, become more helpful. Since the routine calls — 
both local and long distance — are generally dialed 
directly by the customer, it is only where the cus- 
tomer has difficulty, or cannot complete the call him- 
self, that the assistance of the operator is needed. 

Consequently, operators require considerably 
more tact and judgment than was once needed. Call 
handling procedures, too, have been modified to 

Network m.m.Tgcmenl centers keep t<ihs on calling volumes and 
equipment irregularities so alternate routes can be quickly estab- 

lished. The centers also make plans to handle predictable in- 
creases in calling so calls can go through without delay. 

give her more flexibility in handling the individual 
requests of customers. 

There is also an increasing trend to delegate more 
responsibility to the individual operator, a trend that 
is receiving a favorable reaction from operators and 
customers alike. Typical of the ways this is being done 
is by letting the operator use whatever phrase most 
appropriately fits the situation, rather than have her 
rely on a standard statement, and otherwise permit- 
ting her to use her judgment in handling calls. 

The most drastic change — in physical surroundings 
at least — has resulted from the introduction of traffic 
service positions which are replacing the traditional 
switchboard. Instead of using a pair of cords and 
plugs to complete a call, an operator at a traffic serv- 

ice position depresses various combinations of keys. 

With TSP, the customer dials person-to-person, 
collect and credit card calls, and the actual switching 
of the call is handled by the equipment. The operator, 
who can display the number he dialed and the num- 
ber he is calling from, comes in on the line to provide 
assistance, deal with the called party, and to record 
special information for billing purposes. 

TSP provides the customer faster service and more 
accurate billing of calls. Since there is less time spent 
in switching a call, and more dealings with customers, 
the traffic service positions provide the operator 
greater opportunity to use her own judgment and 
initiative in helping fulfill the needs of the customer. 

Automatic call distributors, which regulate the 

About half of the calls to Information operators are for numbers 
correctly listed in the customer's telephone directory. 

volume of calls being directed to each operator, also 
contribute to better service. With the newer equip- 
ment now being installed, calls from one community 
can be automatically switched to operators in another 
office where an operator is available. 

Finding alternate ways to complete a long distance 
call is also done automatically by equipment today. 
But network management centers, located through- 
out the country, play an important role in keeping 
track of the volume of calls on long distance routes 
so alternate routing arrangements can be made when- 
ever calling volumes or equipment problems over- 
load circuits. 

The use of computers, too, is helping today's tele- 
phone operator. An operator in Minneapolis, for 
example, can obtain information on rates needed to 
complete a call by quizzing a computer in Omaha. 
Seconds later a recorded voice provides her the infor- 
mation she needs. 

The most distinguishable change in another oper- 
ator service — Information service — is in the volume 
of calls: in the last 10 years, Information calls jumped 
from about 6,000,000 each day to over 12,000,000, 

a significantly bigger increase than the total of all 
telephone calls. 

The current trend in Information calling volumes 
will require the Bell System to increase the force of 
Information operators from the present 40,000 to 
84,000 by 1980. The importance of providing good 
Information service is evident in the fact that today 
calls to Information have risen to the point where 
they constitute about 45 percent of all operator con- 
tacts with telephone customers. 

The establishment of centralized information cen- 
ters which handle requests from long distance callers 
has also heightened the need for good Information 
service. Many Information operators are now respon- 
sible for a much larger geographical area and must 
use more ingenuity and resourcefulness in order to 
fulfill individual requests. Operating procedures have 
been changed to give her more flexibility. 

Because every request for Information is tailor- 
made to an individual's needs, it has been difficult to 
introduce time-saving equipment. But a couple of 
possibilities are now under development: One is a 
semi-automatic Information console in which all 
records will be stored in a computer. By keying into 
the computer significant data — like the first three 
letters of a person's name — all listings starting with 
those letters will be displayed on a cathode tube. 

The other system under development will use com- 
puter technology with photocomposition devices to 
produce more flexible Information records. Daily 
changes in listings will be fed into a computer as 
they occur and stored on magnetic tape which will 
be used to set a telephone directory page in less than 
a minute. 

Changes in the role of the overseas operator are 
somewhat at the stage that domestic long distance 
operators faced in the mid-fifties when direct dis- 
tance dialing was beginning to be introduced on a 
broad scale. Modifications of call-handling pro- 
cedures have been more significant than technolog- 
ical changes, except, of course, for the interchange- 
able use of cable and satellite circuits. 

Overseas operator dialing made its debut on serv- 
ice to Hawaii in 1957 when operators there and on 
the U.S. mainland began dialing straight through to 
the distant telephone. It was subsequently expanded 
to other points in this hemisphere, and by 1963 
Alaska, Puerto Rico, Bermuda, the Bahamas, Jamaica 
and the Virgin Islands were added to the list. Now 
operators can also dial directly to the called tele- 
phone in seven countries in Europe, and telephones 
in Australia, Japan, Hong Kong, Singapore and 

Customer direct dialing, at present, is limited to 
the Virgin Islands, although a recent trial between 
New York, Paris and London indicated that DDD to 
overseas points is technically feasible, that customers 
like the service (especially its speed), and that cus- 
tomers experience little difficulty in dialing an inter- 
national access code, or in understanding different 
ringing and busy tones, foreign speech, and foreign 
recorded announcements. 

The fundamental problem in expanding DDD to 
overseas points has been the lack of uniformity 
among telephone systems around the globe and the 
number of digits that must be dialed. Significant prog- 
ress, however, is being made in developing a uniform, 
world-wide numbering system and modifying equip- 
ment to permit small-scale intercontinental customer 
dialing early in the 1970's. 

The rapid growth in overseas calling— at the rate 
of 20 percent per year over the last dozen years— is 
encouraging AT&T and its foreign telecommunica- 
tions partners to use their best ingenuity to meet 
overseas traffic requirements. 

Despite time-saving procedures and the introduc- 
tion of new technologies, the growth in long distance 
calling— both foreign and domestic— will require a 
substantial increase in the number of operators. 
Though her job may be changing, the need remains 
for skillful, helpful and understanding operators. D 

Although operators are always available to handle calls, dialing 
directly is the quicker way to obtain emergency assistance. 





Human Ecology 

by Lawrence E. Hinkie^ jr., M.D. 

A broad-scale attack on the problems 
of environment and health— such as 
the Bell System is taking on the 
relationship between work and heart 
disease— is needed because of our 
rapidly changing technology. 

"Ecology" is an "in" word these days. You hear it 
used by people in government, business and aca- 
demic life, by people who are engaged in activities 
as varied as the control of air pollution, the use of 
pesticides, the development of highways, the con- 
trol of population growth, and the study of disease. 

"Ecology" is the study of the "oii<os": the "neigh- 
borhood," the "dwelling place," the "habitat." Spe- 
cifically it is the study of the interrelations between 
organisms and their environment. 

By its very nature all ecology is complex, but hu- 
man ecology is especially complex, because of the 
complex nature of man. Not only must man adapt 
to the food he eats, the air he breathes, and the 
bacteria and pollens he encounters, but he must also 
adapt to his family, his community, his job, and to 
many other facets of his society, the people in it, and 
the rapidly changing technology he has created. 

It has been this rapid development of technology 
that has led to the present growing concern about 
human ecology: 

• As we have created new pesticides and have ap- 
plied them to our fields in order to obtain a greater 
yield of food crops, we have found that when we 

destroyed the pests, we destroyed other plants and 
animals that we wish to have. Furthermore, some of 
our chemicals have been eaten by fish or animals, 
which people in turn have consumed, and the chem- 
icals have found their way into human systems. 

• As we have developed electric dishwashers so we 
could get the housewife out of the kitchen, we have 
found that we needed new detergents to make them 
work well. Unfortunately, some of these new deter- 
gents were immune to the bacterial action that de- 
stroys soap. They passed through our septic systems 
and our sewage disposal plants. Soon we had suds 
in our streams and foam in our drinking water. 

• As we have developed automobiles to get us 
around more quickly, incinerators to burn our trash, 
and power plants to supply us with our ever-growing 
needs for electricity, we have found that there is a 
haze in the air over our cities, and on still days our 
eyes smart because of the smog that we have created. 

But these are only several of the simpler and more 
obvious effects of some of our interactions with our 
environment. In many ways, some subtle and some 
not, the whole pattern of human life is being changed 
by technology. If you compare the life of a farmer 

of five generations ago with that of an American 
working man of today, you can quickly see contrasts 
at almost every point. 

Consider the farmer of the year 1800. His major 
threats to existence were infection, malnutrition and 
injury. To him the dangers he faced were immediate: 
an angry bull or a swarm of bees. Or they were un- 
predictable: pestilence, drought or storm. There were 
few options for him. He could meet his challenges 
by hard work, by prayer, or not at all. 

Compare this man with an American workman of 
today. The major threats to this man's existence are 
no longer infection or malnutrition; he is much less 
likely to die or be disabled by the effects of an injury. 
No longer are he and his children prey of typhoid, 
dysentery, cholera, smallpox, diphtheria, pneumonia 
and tuberculosis. They do not starve or get rickets, 
scurvy, pellagra or protein malnutrition. They are 
not nearly so likely to die from the effects of com- 
pound fractures, osteomyelitis, or appendicitis. Freed 

Dr. Hinkle, director of the division of Humari Ecology at Cornell 
University Medical College and a medical research consultant to 
the Bell System, has worked with its medical directors in studying 
coronary disease among telephone employees. 

of these causes of early mortality, this man and his 
family live much longer than their ancestors. They 
die at a later age of heart disease, cancer and stroke, 
of suicide and alcoholism, and with a variety of meta- 
bolic disorders and an increasing number of diseases 
which apparently are caused by the disturbances of 
his own defense mechanisms. 

Diseases an outgrowth of environment 

Physicians today — and especially industrial health 
specialists — are interested in human ecology because 
they believe that the diseases of modern man may 
be in part an outgrowth of his modern environment. 
Physicians suspect that the fatty atherosclerotic de- 
posits in human arteries, which lay the ground for 
heart attacks and strokes, may be related to our abun- 
dant food supply, and possibly to our rich supply of 
protein and animal fat. They believe that our abun- 
dant food supply is also a factor in the prevalence of 
obesity, diabetes and high blood pressure. 

Physicians do believe that the lack of physical 
activity among modern men contributes to the weak- 
ness of the muscles of their hearts, as well as to the 
muscles of their bodies, and that this prevents their 
hearts from developing that rich supply of nutrient 
vessels which would make them better able to sur- 
vive the effects of the closing of their coronary 
arteries by atherosclerosis. The necessity for meeting 
deadlines and time schedules, and for stifling aggres- 
sion, may have physiological consequences that make 
men more likely to have heart attacks. These features 
of modern life are an important reason why so many 
people have symptoms of anxiety, fatigue and insom- 
nia. They may be one reason why the smoking of 
cigarettes and the consumption of alcohol is so high 
in our society, and why people are so reluctant to 
give up these habits. Smoke that men inhale may 
cause some forms of severe chronic lung disease as 
well as cancer. Other chemicals that men inhale, eat 
or drink may also cause serious illnesses. 

The modern physician believes this, but he does 
not "know" it with the assurance that he "knows" 
that tubercule bacilli are involved in tuberculosis. The 
evidence relating to the causes of modern diseases 
is not as convincing or complete as the evidence 
relating to the causes of diseases of yesteryear. In the 
classical infectious diseases and nutritional disorders, 
the role of a single environmental agent was of such 
overwhelming importance that other factors could, 
in effect, be disregarded. It did not matter that pul- 
monary tuberculosis was a disease of the urban 
workers, or that pellagra was a disease of the south- 
ern sharecroppers; if you could control the infectious 
agent or supply the missing vitamins, the disease 
would disappear. 

This does not seem to be true of coronary heart 
disease, for example. An abundant diet, a sedentary 
life, a large amount of smoking and the effects of 
meeting deadlines and struggling to get ahead have 
all been implicated as causes of heart attacks, but 
none of these seem to be "the cause" of the disease. 
There may be a common thread running through all 
of these causes, but such a thread has not yet been 
discovered. As of this moment it appears that a num- 
ber of "causes" cooperate to produce the conditions 
under which coronary heart disease and many other 
modern diseases disappear. 

The physician who is interested in the effects of 
human ecology upon disease likes to study people 
in their natural habitat as they go about their daily 
lives. He often needs large numbers of people. By 
studying different people involved in the same life 
pattern, or similar people engaged in different life 
patterns, he can gain some idea of the effects that a 
pattern of life has upon a man's health, and the 
method by which this effect is produced. 

This is why we at the Division of Human Ecology 
at the Cornell University Medical College in New 
York City have asked a number of men in the Bell 
System to collaborate with us during the past five 
years in our studies of human ecology in relation to 


coronary heart disease. These men, selected from 
various Bell System companies, have undergone 
many different kinds of diagnostic tests, and have 
answered questions about their health, their activi- 
ties, and their habits. 

Several years ago, more than 100 men from the 
New York Telephone Company underwent a long 
series of psychological tests. Some of these men had 
had heart attacks; others had had a completely clean 
bill of health and showed no evidence of character- 
istics that are thought of as predisposing to coronary 
disease. In 1963 and 1964 more than 300 men from 
the New Jersey Bell Telephone Company went 
through an elaborate series of diagnostic tests, filled 
out a long questionnaire, and went through a num- 
ber of interviews designed to find out about their 
past health, the health of their parents, brothers and 
sisters, their daily routines, and their habits of exer- 
cise, smoking, eating, drinking and taking medicine. 
These men also participated in a seven-hour test dur- 
ing which their hearts were monitored constantly. 
Now four years later, they are coming back to Cornell 
—New York Hospital for another series of tests. 

Studies yield mass of data 

As you might expect, studies such as these yield 
a great mass of data. For each man in the New Jersey 
study, there are more than 80 punched cards of data 
to be analyzed by computers. In this study, every 
episode of disability caused by coronary heart dis- 
ease among men in the telephone companies has 
been reported anonymously, along with information 
that would allow us to estimate how various factors 
of geography and work history have influenced the 
occurrence of heart attacks. 

Some results of the studies to date can be sum- 
marized briefly. Although coronary disease is the 
most common cause of death among active male Bell 
System employees, the death rate from that cause 
here is slightly lower than that for men of comparable 

age in the nation as a whole. It is not peculiarly a 
disease of higher level managers and executives. The 
investigation so far shows no indication that such 
factors of work experience as promotions, transfers, 
or new job assignments, taken by themselves, have 
had any marked effect on the risk of death from coro- 
nary disease. The results of the studies are not yet 
final. Continued study will shed further light on the 
relation between life patterns and the incidence of 
coronary disease among men in the Bell System. 

All of these studies have been concerned with the 
effects of the human environment on human health; 
but it would be wrong to give the impression that 
human ecology is concerned primarily with health. 
At many institutions throughout the country, scien- 
tists from many disciplines are studying many facets 
of human ecology: how different patterns of water 
utilization may affect the ecology of a river valley; 
how different patterns of industrial production affect 
the pollution of the atmosphere; how the heat pro- 
duced by cities affects the weather around them; 
how population planning may affect the character- 
istics of national populations. There are studies of 
transportation patterns, housing designs, pesticides, 
and the effects of time change during air travel. 

No single aspect of these studies is new. What is 
new is an awareness among modern scientists of the 
complex interrelations that exist between society, 
technology, people and the surrounding wodd. 

Formerly those concerned with developing a new 
airplane considered only those features of the plane 
which would affect its flying qualities. Now, as the 
new supersonic transport is being designed, scientists 
are considering how its exhaust will contaminate the 
atmosphere; how its noise will disturb the people 
around the airport; what kind of new airports will 
be needed; how these airports may disturb popula- 
tion patterns, transportation, and the economy of the 
region in which they may be located. Such consider- 
ations of human ecology are becoming an ever 
greater part of the science of today. D 



Art and Science: Two Worlds Merge 

Through centuries of civilization, the artist has used 

technical knowledge, but now scientists are finding that working 

with artists can broaden their own thinking in creative technology. 

In this day of intensifying specialization, people often 
think of art and science as two completely disparate, 
even mutually exclusive, disciplines — areas of human 
endeavor as opposite as poles of the earth. And yet, 
a new affinity between the two is drawing together 
people who, until recently, might never have met. It 
is as though the rivers of science and art have reached 
a point of confluence where scientist and artist are 
intermixing in a mutually fruitful exchange of ideas. 

Active in this confluence are a number of men at 
Bell Telephone Laboratories. What they are doing 
and their reasons for collaborating with artists are as 
diverse as the technical projects they are working on. 
Equally diverse are their feelings about interaction 
with the artist. Their point of agreement is that they 
all feel it is growing, that it is important, that tech- 
nology contributes to art and that art is, and may 
become even more important to technology. 

At Bell Laboratories, scientists studying the fields of 
speech, hearing and visual perception have become 
absorbed in the world of the artist in many ways di- 
rectly connected with their work. Much of this scien- 

tific exploration enlists the aid of the computer, 
which is becoming more and more useful as a graphic 
tool not only in research but also, somewhat unex- 
pectedly, in creating new art forms. 

Occasionally, basic research has led to artistic by- 
products from the scientists themselves. The "sculp- 
tures" of A. Michael Noll, which were exhibited at 
the Howard Wise Gallery in Manhattan, grew out of 
his research into computer-generated three-dimen- 
sional graphs and movies that compare mathematical 
models with reality and depict phenomena that are 
not directly observable. The precedent for this was 
Mr. Noll's creation of moving or "kinetic sculptures," 
which are made by describing their shapes and 
dimensions in numbers. He has also programed the 
computer to generate drawings composed of quasi- 
random elements in the style of abstract painter Piet 

Obviously excited by the computer's possibilities 
as an artistic medium, Mr. Noll envisions the artist of 
the future working with the computer by direct man- 
machine interaction. "The creative potentialities of 


the computer result in a totally new kind of artistic 
medium — a creative medium with which the artist 
can interact," he says. "The potential of such a medi- 
um as collaborator with the artist is truly exciting." 

Also exhibited at the Howard Wise Gallery was 
work done by Bela Julesz, who is concerned with 
basic research in visual perception at Bell Labs. He 
has created a computer movie of random patterns 
with texture which dramatizes visually the relation- 
ship between textures of physical objects and percep- 
tion of their shapes. 

The difference is motivation 

Mr. Julesz says, "When the scientist starts to see 
that some of his creations become artistic and are 
accepted at more than their scientific value, as a piece 
of beauty, it's an unusual experience. While these 
computer movies were intended for a study of visual 
perception, not as art, I think that visual perception 
is historically a common area for both the artist and 
the scientist, a common intersection where there is 
no gap or artificial bridge. The same kinds of things 
can be artistic or scientific; the only difference is the 

"The artist is searching for an artistic truth, an inti- 
mate truth he wants to convey," Mr. Julesz goes on, 
"and 1 am searching for a scientific truth, which is 
testable and very defined. The artist is also interested 
in solving problems, and the computer might be a 
common tool to bring us together because it helps to 
execute the problem. It has made us more aware of 
the interaction between science, technology and art." 

Kenneth Knowlton, another scientist at Bell Lab- 
oratories, has specialized in computer-produced 
motion pictures. He has devised a special program- 
ing language called BEFLIX, which permits the tech- 
nologist to present a visualization of what he wants 
to explain. In collaboration with film maker Stan Van- 
derbeek, Mr. Knowlton has produced a one-minute 
film, "Man and His World," which, without story line, 

is a series of patterns with color background, created 
entirely by the computer. 

Of this collaboration, Mr. Knowlton says, "It is 
teaching me something about art, about expressing 
myself, freeing up my own thinking so that I no longer 
think in nearly so stereotyped a way about the com- 
puter and the things one can do with it. Stan Vander- 
beek has been using the BEFLIX movie language ex- 
tensively; he is learning programing techniques so 
that he can push ahead with experimental computer 

Mr. Knowlton considers that Vanderbeek's experi- 
ence in presenting things visually through his films 
has helped in producing technical movies with the 
computer. "Vanderbeek thinks in visual terms," says 
Mr. Knowlton. "He's interested in color, motion, 
after-images, patterns; in making a film he has to 
consider all these. When I began making films with 
the computer I was not aware of these considerations. 
Vanderbeek is teaching them to me— I now appreci- 

Compos/fc s((// /ro/71 computer movie made Jl Bell Li/xir.ifor/es 
represents ,i coiiimunications satellite matting one orliit of the 
earth. This helps scientists design attitude control systems. 


ate their importance in communicating visually, 
whatever the content of the film. 1 think that any 
scientist using the computer to make movies can 
profit from the seasoned film maker's knowledge and 

While these men — Noll, Julesz, Knowlton, and 
others at Bell Laboratories — in the course of their 
research have produced computer-generated images 
of artistic merit and interest, their primary objective 
still is research. Specifically, they are concerned with 
exploring the computer's manifold capabilities and 
its potential uses as a research tool. For example, 
Frank W. Sinden, a colleague at Bell Laboratories, has 
produced a series of computer-generated movies 

which attempt to isolate those three-dimensional ef- 
fects that we detect entirely through motion or time 
sequence. As these researchers point out, their ex- 
perience with the artist's point of view has provided 
a useful feedback into their own work — a kind of 
yeast in the cake of pure science. But the ultimate 
value of this experience, for them, will lie in its 
stretching of the horizon of research. 

Translating movement into sound 

Manfred Schroeder, director of Bell Laboratories' 
acoustics, speech and mechanics laboratory, a year 
ago participated in an experimental entertainment 
called "Nine Evenings: Theater and Engineering." This 
was a collaborative project between dancers, artists, 
musicians and technologists. Engineers and scientists 
at Bell Laboratories contributed their technical exper- 
tise, working on their own time, to produce a fusion 
of music, painting, dance, abstract sound, film and 
live television. 

"I became involved," says Mr. Schroeder, "because 
I am familiar with all kinds of sound effects. Acoustics 
is my speciality, and part of the endeavor here was to 
integrate acoustic effects into these performances. 
Dancer Lucinda Childs was asking for things to trans- 
late body movements directly into sound, so that she 
could actually create her own accompaniment as she 
danced. We came up with a device that reflected 
ultrasonic waves from her body, then converted them 
to audible sound. 1 got the idea from work I'd done 
years ago on stabilizing public address systems, and 
feedback problems with the Speakerphone, which 
under certain conditions produced howling or sing- 
ing noises. It wasn't a very interesting sound. But 
while we were working with it we discovered that it 
would make all kinds of funny sounds if you did the 

lean Claude Risset, visiting French physicist and composer, dem- 
onstrates trumpet tune synthesized by computer. This is part of 
continuing research in the basic properties of sound and speech. 


right things to it and if people walked through the 
room. When Miss Childs made her request, I remem- 
bered that work. But," he adds, "it needed some artis- 
tic concept to make it worthwhile and enjoyable." 
Mr. Schroeder considers that such new uses of 
technology have a real future in artistic expression. 
"We certainly have a great storehouse of scientific in- 
formation that would allow us to produce a variety of 
acoustical and visual effects. For example, we could 
have sounds whirl around in space, or we could have 
this translation of movement into sound, or light into 
sound, or sound into light." 

Computers could simulate dancers 

"We could use digital computers to simulate a cer- 
tain effect. One could write a computer program to 
simulate not only one dancer and a microphone, but 
also do the same thing for a troupe of 50 dancers. 
We could give the choreographer knobs on the com- 
puter console to change the movements of the dan- 
cers and hear the differences in sound — give him the 
possibility of altering his original idea." 

Although he thinks of himself specifically as an 
engineer, in connection with "Nine Evenings" Mr. 
Schroeder foresees a more intimate interaction be- 
tween art and engineering in the future. "I think it is 
quite conceivable," he says, "that we will have mixed 
personalities here, that artists in these fields will 
emerge from the engineering profession." 

Another of the people at Bell Laboratories who has 
been actively engaged in collaboration with artists is 
Billy Kluver, who conducts laser research in the Physi- 
cal Optics and Electronics Research Department. Mr. 
Kluver has worked with way-out kinetic sculptor Jean 
Tinguely, sculptor and film maker Andy Warhol, 
painter and sculptor Robert Rauschenberg, composer 

Bell Laboratories- Billy Kluver arranges helium-filled pillows at 
^ ^^Tl', ,T '^"'"^">'"g the merging of art and technology, 
which Mr. Kluver considers "a natural marriage " 


John Cage, painter Jasper Johns, and others. He was 
a major motivating force behind the "Nine Evenings" 
project and worked with its performers in his spare 
time. While the show's mixture of sound, light and 
motion effects never before heard or seen evoked 
mixed responses from audiences, Mr. Kluver con- 
siders it a fruitful experience for all concerned. 

The common ground where engineer and artist 
meet is illuminated more clearly when Mr. Kluver 
speaks of his own involvement. "The artist's work is 
like that of the scientist; it is an investigation which 
may or may not yield meaningful results. 

"The artist and the scientist both work with the 
world around them; their perception of this world is 
their material. Their differences lie in the way in 
which they use this material. The scientist must build 
on and include previous scientific knowledge in his 
work. The artist, once he has made his choice as to 
the essential character of his work (be it painting, 
sculpture, music), will make every effort to avoid easy 
associations or connections with other works of art 
or other known fields of human activity. When you 
see a good work of art for the first time, it gives you 
the feeling of not relating to anything else you know 
— yet you are forced to become aware of it. 1 am 
interested in art as an engineer, not as an artist." 

From his own experience as a technologist work- 
ing with artists, Mr. Kluver says, "You do things you 
wouldn't normally do, because you're in touch with 
a mind whose vision is totally different from yours. 
The artist's vision and concern relate to other aspects 
of human activity, and that's the end that particularly 
interests me. I'm not so much interested in helping 
artists as I am in seeing what effect the artist could 
have on technology. In the future, I see the artist hav- 
ing more and more impact, as he learns more about 
technical processes. The contribution of the artist 
could conceivably lead to an increased awareness, a 
new view of the problems the engineer, designer, 
scientist has to deal with. For instance, it might reflect 
on questions like: What should the next mass media 

look like? We will have the megalopolis; what is it 
going to look like? I think that the main influence 
of art and technology together will come in the 
area of environment." 

By-products of research 

It is perhaps in the field of sound — especially com- 
puter-produced sound — where the interaction be- 
tween artist and technologist has been closest. Sound 
and music created by the computer are by-products 
of research in new techniques for transmitting voice 
and music over telephone and other communications 
systems. The potentialities of this "machine music" 
are being examined by many musicians and mathe- 
maticians at Bell Laboratories and elsewhere, includ- 
ing MIT, Princeton University, Stanford University, 
UCLA, and the Argonne National Laboratory. 

Among those practicing musicians who have come 
to Bell Labs for aid in their explorations are Gerald 
Strang, member of the Music Department in the Cali- 
fornia State College system; composers Milton 
Babbitt and James Randall of the Princeton University 
music faculty; Vladimir Ussachevsky of Columbia 
University; and James Tenney of Brooklyn Poly- 
technic Institute. There were also the late Edgar 
Varese and Herman Scherchen. 

Meanwhile, some Bell Laboratories researchers 
have themselves become composers, including John 
R. Pierce, executive director of the Research Commu- 
nications Sciences Division, Max V. Mathews, direc- 
tor of the Behavioral Research Laboratory, and New- 
man Guttman, formerly of Acoustics Research. 

Mr. Pierce, who is a writer of both fiction and arti- 
cles, and a poet as well as a composer, says of his first 
adventure in computer music, "The first computer- 
played music was composed by Newman Guttman 
and programed by Max Mathews as an experiment in 
producing and using certain voice and other sounds. 
It was just a little flyer. I wondered whether a compu- 
ter had to sound like that, or whether it was what 


Newman had done. So I dug out a very short little 
conventional piece that I had composed and ran it 
through the computer, and it sounded more like con- 
ventional music." 

New insights into acoustics 

Pierce and Mathews started using the computer to 
make "musical sounds," and that led them into ama- 
teur composing and eventually into the issuing of a 
record. Mr. Pierce emphasizes that it was the chal- 
lenge of something new that made it exciting. "I have 
never untangled the art and the science in living," he 
says. "I certainly wouldn't have bothered to compose 
little ditties and I never would have gotten them on a 
record if it hadn't been for the computer. The only 
thing that led me to do this was curiosity — the chance 
to exploit and play with something entirely new. It 
was fascinating. It has inspired me, informed me." 

Mr. Pierce points out that such excursions into 
computer-generated sound have led to new under- 
standing of sound quality and acoustics. "Since Max 
Mathews and I devised various ways in which the 
computer generation of sound could be made more 
flexible," he says, "there has been a continued inter- 
action among the psychoacoustics of perception, the 
study and production of speech, and our experiments 
with musical sounds. 

"In my case," he goes on, "I have become more 
sensitive to, and have a greater appreciation of, sound 
quality. I've been interested in the generation of 
speech from phonetic symbols stored in the memory 
of a computer. I regard this as a very important and 
challenging problem in the field of man-computer 
interaction. Some of the experiments 1 have made 
with musical sounds have led me to believe that it 
will be possible to overcome the mechanical quality 
of computer-generated speech. Our studies of the 
quality of violin tones and trumpet tones are very 
closely related to our studies of the quality of com- 
puter-generated speech." 

At present, spoken words produced by the compu- 
ter are limited by the difficulty of describing the 
essential features of such complex sounds precisely. 
Here, Mr. Pierce considers the uniquely human sen- 
sitivities to be indispensable. "One of the most pow- 
erful human faculties," he says, "is that of being able 
to judge qualities even when we cannot measure 
them. Here the ear of the trained musician may be as 
valuable as the digital computer. We are looking for 
needles in haystacks, and only the sharp ears of 
musicians and the sharp minds of scientists will 
enable us to find them." 

Max Mathews, a specialist in behavioral psychol- 
ogy, has worked with several composers in computer 
techniques, and has composed music himself. In par- 
ticular, composers Randall, Tenney and Strang are 
writing music for the computer because, as Mr. Math- 
ews says, "musicians can't play the music they write 
or wish to write. It is too precise and too fast, and 
requires things that are physically impossible." Using 
a sound synthesizing computer program which Math- 
ews developed, these composers write out a score, 
specify the sounds they want synthesized, and the 
results can be heard through a loudspeaker con- 
nected to the computer as though emanating from an 

Collaboration is a two-way street 

In Mr. Mathews' opinion, collaboration between 
artist and technologist is, in a very real sense, a two- 
way street. "What the technologists get out of art are 
the same things that anyone else gets out of art, the 
same thing civilization gets. These are the very im- 
portant, long-range permanent values; they represent 
some of our best achievements." 

The scientist may also derive benefits unique to his 
own situation. "As far as unique things are con- 
cerned," says Mr. Mathews, "this depends upon him 
as an individual: he may get quite a bit of inspiration; 
he may get new ideas; he may get some idea from the 


Artist Robert Rauschenberg and dancer Lucinda Childs, per- 
formers in last year's "Nine Evenings" entertainment, discuss 

unique electronic environmental system with Bell Laboratories 
engineers Leonard I. Robinson and Per Biorn. 

art that he can use directly in his technology. We 
have, certainly, examples of this in the understanding 
of speech and speech quality that have come out of 
our studies in music. 

"Currently, we have been concerned with experi- 
ments on tone perception, a new theory of conso- 
nance and dissonance, which was primarily studied 
for music. The sounds and the percepts are the same 
musically and speechwise, and music is a much sim- 
pler sound source, so we can study it in greater detail 
and understand it better. These tonal studies have 
given us a new insight which we would not have 
gotten directly from speech because it is too com- 

Whatever course the converging rivers of art and 
technology may take, it seems certain that the con- 
vergence is permanent. The new windows now being 
opened by science and art working together are 
broadening the view to the mutual profit of both. 

"Deeper understanding," Mr. Pierce says, "has 

broken down many of the barriers between various 
fields of science. Perhaps this will become true of the 
barriers of ignorance and temperament which have 
divided science and engineering from the arts. This 
could surely open new opportunities for artists, and 
I really believe that it can quite as much open the 
eyes and ears of engineers and scientists — and even 
their minds." 

Max Mathews emphasizes succinctly, from the 
scientist's point of view, what the collaboration be- 
tween the scientific community and the world of art 
means to him: "You get inspiration from working 
with the artists, generally wake up. And this is one of 
the requirements for doing creative research — to be 

It may have been the eventual fruits of such col- 
laboration that Sir Francis Bacon had in mind when 
he wrote: "The real and legitimate goal of the 
sciences is the endowment of human life with new 
inventions and riches." D 


Bell Forum: A statement of policy 

Setting Rates for Services 

In recent testimony in the FCC interstate rate case, William H. Ellinghaus, AT&T 
Marketing and Rate Plans vice president, outlined the Bell System's pricing policy. 
Following is an excerpt of his testimony. 

The basic pricing objectives of the 
Bell System can be briefly summar- 
ized. Our rates are designed to achieve 
our over-all revenue requirement, to 
meet customer needs, to promote 
greater use of our services, and to en- 
courage efficient use of our plant. We 
intend that the revenues from each 
principal category of service fully 
cover the costs incurred in furnishing 
that service, including a return on the 
related investment, and in addition 
make a contribution to the coverage 
of our common costs. Since message 
toll telephone (long distance) service 
accounts for more than 80 per cent of 
our total interstate revenues, it is plain 
that the most significant indicator of 
the appropriate rate level for this serv- 
ice is our over-all interstate earnings 
requirement. With respect to the other 
principal services, our objective is to 
price them so that each contributes as 
much to our total earnings as is rea- 
sonably practicable, taking into ac- 
count market conditions, rate relation- 
ships and other relevant factors. In this 
way the contributions which these 
other services make to our earnings 
permit us to provide message toll tele- 
phone service at rates lower than 
would otherwise be required to 
achieve our over-all earnings objec- 
tive. So long as each service covers its 
relevant costs (including return) and 
makes some additional contribution, 
our other services benefit. 

A consideration of costs is neces- 
sary, then, to determine total revenue 
requirements and to make sure that 
particular services are contributing to, 
and are not a burden on, over-all earn- 
ings. Cost considerations, however, re- 
late to the conditions under which we 
can supply our services. Having taken 
account of these conditions, we must 
also consider the impact of rates on 
the demand for those services. In this 
respect the Bell System is like any 
other business, and the rates for its 
services must reflect the realities of 
the market. In designing rates which 
are responsive to market conditions, 
factors in addition to cost are critical 
in shaping our pricing decisions. The 
development of a pricing structure to 
which customers will respond by buy- 
ing our services is as much a part of 
our marketing requirements as the de- 
velopment of the services themselves. 

Many of these non-cost factors in- 
volve the interplay of market forces 
and rate relationships frequently con- 
sidered together under the general 
concept of relative value of service. 
In considering these factors it is im- 
portant to bear in mind two significant 
characteristics of our business. 

First, to a greater extent than in most 
other industries, the value of our serv- 
ices is directly related to their avail- 
ability and to the extent of their use. 
One telephone or teletypewriter is 
useless by itself, but each acquires 

value to the extent that it may be used 
in connection with other instruments. 
Thus, the usefulness of a customer's 
service is enhanced by the amount, 
quality and type of service furnished 
to others or at other locations of the 
same customer. 

Second, our service offerings inter- 
act and overlap with one another to 
a substantial degree. So much so, in 
fact, that the price levels established 
for one service will usually affect the 
demand for other services. For ex- 
ample, a change in Telpak rates may 
directly affect the demand for private- 
line telephone service. While these 
interactions are difficult to measure, 
and even more difficult to predict with 
accuracy, we know that they exist and 
must be considered in pricing our 
services effectively. 

Satisfying customer needs 

To the fullest extent possible we 
endeavor to design our rate structures 
to permit customers to select the ap- 
propriate service arrangements which 
best meet their particular communica- 
tions needs. Those needs are continu- 
ously changing. As Dr. William O. 
Baker (vice president. Bell Telephone 
Laboratories) showed in his testimony, 
the accelerating pace of technological 
advance is constantly creating new 
products and services which lead to 
significant changes in business and 
government operations. Our popula- 
tion continues to expand and become 
more mobile, and localities are chang- 
ing their characteristics with urban 
growth. These developments generate 
new and expanded communications 
needs. Thus our goal is to offer a wide 
enough range of services and classifi- 
cations to reasonably meet the varying 
requirements of all our customers. 

In considering the degree of diver- 
sity in our offerings which may be ap- 
propriate in meeting these various 


needs, there must be a balancing of 
other considerations. For example, 
simplicity and acceptability are also 
desirable attributes of a rate structure. 
Rate schedules should be easy for the 
public to understand and for the car- 
rier to administer correctly and im- 
partially. In this regard it is desirable 
to minimize the number of rate ele- 
ments and to select elements which 
identify meaningful service features. 

Encouraging increased use 

Rates should be designed to encour- 
age greater use of service and to stim- 
ulate a pattern of use which provides 
for efficient use of plant. Such a goal 
serves to achieve the purposes speci- 
fied in the Communications Act: the 
maintenance of universally available 
communications services with ade- 
quate facilities at reasonable charges. 

As noted earlier, we must recognize 
that the usefulness of every offering is 
affected by the amount, type and qual- 
ity of service which it makes available. 
Consequently, we believe that serv- 
ices should be priced within the reach 
of the broadest possible range of cus- 
tomers, and at levels which will stimu- 
late the growth and development of 
such services. 

In attempting to determine the rate 
levels which will best serve these ends 
we must give appropriate weight to 
the dynamic nature of communica- 
tions technology and to the fact that 
unit costs are affected by the prices 
charged for our services. As pointed 
out by Mr. A. M. Froggatt (AT&T en- 
gineering economics vice president) in 
his testimony, continuing technologi- 
cal progress has also contributed to a 
progressive reduction in the unit costs 
of much of our added plant capacity. 
In designing rates we should, there- 
fore, look to anticipated volumes and 
costs. Although the estimation of fu- 
ture volumes and costs is neither a 

simple nor an exact science, a require- 
ment that rates be based solely on 
historically determined cost levels 
would work to the detriment of our 
customers. Such a requirement would 
inhibit our ability to introduce new 
services at attractive rates, would re- 
sult in lower volumes of business, and 
would thus result in a less rapid rate 
of introduction of the new, lower unit- 
cost plant facilities which benefit all 

Finally, we must constantly devise 
means to encourage not only in- 
creased use of our services but also 
more efficient patterns of use. This 
dual objective is illustrated in our 
message telephone schedule by the 
special low rates for evening and 
weekend calling, which are designed 
to induce customers (1) to increase 
their usage and (2) to divert calling 
from peak to off-peak periods. 

Competitive alternatives 

It is axiomatic that, in addition to 
covering the relevant costs, rates must 
be set at levels which take account 
of the competitive alternatives avail- 
able to purchasers of communications 
services. The competition referred to 
here stems not only from other com- 
munications common carriers but also 
from non-regulated suppliers and 
from the availability of alternative Bell 

Non-regulated suppliers offer com- 
munications equipment and services 
over a growing range of the market. 
In the area of bulk communications 
their influence is now most apparent 
because of the availability of high- 
capacity, low-cost microwave facilities 
and modern, electronic computers 
with switching capabilities as alterna- 
tives to common carrier services. In 
order to meet the growing needs for 
high-volume, flexible communications 
at rates which offer the customer a 

realistic choice between private mi- 
crowave systems and common carrier 
service, we developed and offered 
Telpak service. We are faced with a 
situation in which we are offering to 
serve large, sophisticated buyers per- 
fectly capable of providing their own 
communications systems, many of 
whom have already elected to do so. 

Of course, customer choice is not 
influenced exclusively by price. But 
if our charges become significantly 
higher than the costs of such alterna- 
tives, we would find ourselves with a 
declining participation in the bulk 
market. This would inhibit the rapid 
introduction of technologically ad- 
vanced facilities into our network and 
so reduce the potential for improved 
service and lower rates for the general 
public which uses our basic telephone 
message services. We are convinced 
that we can profitably provide bulk 
services at rates which are in the range 
of private microwave costs. If our rates 
and those of the other common car- 
riers are significantly above that range, 
we will all find ourselves excluded 
from a major portion of the market. 
Such a loss would be detrimental to 
the customers for our other services. 

We must also recognize that both 
the carrier and its customers have an 
interest in the relative stability of rates 
and the revenues which they produce. 
Customers should be able to make 
plans without the hazard of frequent, 
unpredictable wide fluctuations in 
charges. On the carrier's part, con- 
tinual changes in rates can have un- 
settling effects on both its revenues 
and its ability to market its services 
effectively. Thus, significant changes 
in rate levels ought to be proposed 
only when needed to meet changed 
conditions which are reasonably well 
defined and are considered to be rel- 
atively permanent, and not merely 
transient, in nature. D 



by Merriman Smith 

As late as 1929, the President of the United States 

did not have a telephone in his office. 

Today, the most sophisticated kinds of communications 

help our chief executives carry out their duties 

as national and world leaders. 

Air Force One, a gleaming silver and blue jet trans- 
port, speeds across America at 35,000 feet bound for 
the Orient and a Summit Conference of nations in- 
volved in the Vietnam war. The President of the 
United States sits in a reclining leather chair beside 
a long table in his combination office and sitting 
room. Tiny gold stars shine in an artificial sky on the 
ceiling. This is the larger room of his suite in the after 
section of the aircraft. 

At the end of his table a tiny red light glows. The 
President picks up a white telephone. 

"Hello there, Senator," he says. "Are you all going 
to vote today on the bill 1 called you about from Texas 
last night?" 

Conversation ends quickly and the President says 
to an aide, "Have the White House send us the roll 

call on that bill before we refuel in Hawaii. Now I 
would like to talk to Secretary Rusk in London." 

The aide picks up another telephone in the cabin 
and gives instructions to the communications center 
m the forward area of Air Force One next to the con- 
trol bridge. In less than a minute. Rusk is on the radio- 
telephone and instructions to transmit the Senate roll 
call are received back at the White House by radio- 

Futuristic science fiction, a Strangelove dream of 
the Presidency in 2000 A.D.? No, a routine moment 

Mr. Smith has been the White House Correspondent tor United 
Press International since 1941. For his eye-witness coverage of 
the assassination ot President Kennedy, Mr. Smith received the 
1964 Pulitzer Prize lor Distinguished Reporting in National Affairs. 
Copyright ©, A. Merriman Smith, 1967. 


of 1967, albeit difficult for the uninitiated to compre- 
hend. And even more amazing when regarded along- 
side relatively recent history. As late as 1929, there 
was no telephone in the President's White House 
office. In the spring of that year, however, Herbert 
Hoover had a telephone installed at his desk. Until 
that time, the presidential telephone had been in a 
hallway booth outside the office — a blissful arrange- 
ment dating back to Dec. 1, 1878, and President 
Rutherford B. Hayes. 

Since March 27, 1929, when Mr. Hoover brought 
the black stand-up instrument out of the hallway and 
onto his desk, each succeeding President has had 
progressively better communications. 

Better communications help free President 

Improving communications plus marked advances 
in transportation have freed American chief execu- 
tives to move about the earth. Today it seems almost 
silly, but as recently as 1947, the legality of official 
papers signed by President Harry S. Truman was chal- 
lenged because he affixed his signature to these 
documents while visiting Brazil. 

In 1967, President Lyndon B. Johnson could sign 
important legislation 40,000 feet above Kuala Lumpur 
without causing the slightest legal ripple among con- 
stitutional purists on Capital Hill. 

Moreover, effects of continuously improving and 
expanding communications are wider by far, socially, 
economically and politically, than their application at 
the White House. The earth shrinks daily under a net- 
work of cables, wires, radio channels and satellites. 

A shot fired in Vietnam literally is heard around 
the world within a matter of minutes. An oil tanker 
slams aground in a foamy storm off a European beach 
and the owners learn of it instantly a thousand miles 
away. A Black Power advocate's street-corner oratory 
on the Eastern shore of Maryland booms from tele- 
vision screens simultaneously across not only the 
country, but the world — as do Arabs hot-footing it 

over Sinai peninsula sands in front of Israeli tanks. 

Rapid advances in telecommunications are not 
without negative aspects. For one thing, they have 
shortened the line between cause and effect. This 
cuts into allowable reaction time for governments 
and their chiefs. 

Also, people of every land know more about each 
other than ever before. Such knowledge is not always 
pleasant. In newly emerging countries, newly 
acquired facts do not equate with understanding, for 
our scientists are many time-miles, possibly light 
years, ahead of the growth rate in other areas of 
human progress. 

High-speed communications available to a Presi- 
dent today may improve his functional ability, but 
somewhat in ratio to the added number of problems 
with which he must deal. During the 1965 crisis in 
the Dominican Republic, U.S. Ambassador Tapley 
Bennett was on the telephone to the White House 
and State Department, giving a running account of 
streetfighting as bullets ripped into the building from 
which he spoke. 

As recently as the late Thirties, it would have been 
many hours, even days, before such on-the-spot dip- 
lomatic information would have been available to 
the Washington decision-makers. This may be a plus 
for national welfare, but it is hard on the men who 
must decide what to do about crises, particularly 
when they draft messages for the "Hot Line" Teletype 
to the Kremlin. 

The promise of communications 

Quite aside from the personal hardship on a Presi- 
dent being awakened at 3:30 a.m. by a telephone 
report on new race riots in a distant American city or 
by a call from the Pentagon about a deadly fire 
aboard a U. S. aircraft carrier in the Gulf of Tonkin, 
it could be that the wizardry of modern communi- 
cations has more promise of holding another World 
War in abeyance than many of the other, more con- 


ventional diplomatic efforts. 

The problem is one of understanding the torrent of 
words and pictures flashing from nation to nation. 
International understanding is bound to improve as 
information flows into heretofore blind areas, but 
there remains a question : will understanding improve 
with the speed which is needed to convince others 
that modern warfare is a depleting and self-defeating 
answer to differences among men? 

The weight of being the focal point of a world-wide 
communications system may be an onerous chore for 
a future American chief executive, but Lyndon B. 
Johnson is fortunate — he grew up as a political leader 
in an era of enlarging communications. Thus he is 
not only at home with the lights of a Call Director 
blinking beside him, but he insists on constant com- 
munications capability. 

LBJ in constant touch 

His practice of being able to keep in touch goes 
far beyond the conventional telephone. While he is 
away from his ranch home and office, he is in con- 
stant touch with the rest of the world through a highly 
sophisticated radio system over which telephone 
calls can be patched as necessary. It is startling at first 
to be riding with him when he picks up the micro- 
phone of a radio transceiver beneath the dashboard 
to ask, "Is Mrs. Johnson around?" 

"One moment, sir," comes the crisp voice of a 

Then only moments later, "Yes, dear." 

"Bird, we're 22 minutes away from the house and 
I'll be bringing four of the boys to lunch." 

"Fine, dear, everything's ready." 

Another Johnson auto trip might be interspersed 
with this sort of radio traffic: 

Voice suddenly from out of nowhere (actually one 
of his special assistants back at the ranch office) : "Sir, 
Secretary Wirtz is calling about that emergency 
board. Do you want him put through?" 

President: "Tell him I have the names from Wash- 
ington by Teletype and I'll sign the order this after- 
noon. I'm about 30 minutes from the house and 
unless it is urgent, I'll talk to him then." 

(short pause) 

Voice: "Nothing urgent, sir. He'll call again at 

The circuit is of such quality that there is no added 
shortwave lingo to establish that the message was 
understandable and received. The President merely 
puts the microphone back in its socket, flips a switch 
and the car fills with soft tape-recorded music. 

Presidential communications are more impressive 
when he is away from the White House simply be- 
cause they are more visible, more noticeable. For 
example, on a typical speaking trip to New York or 
San Francisco, the White House party may take along 
as many as 100 shortwave handi-talkie radios, plus 
one or more base stations operated by the Army 
Signal Agency. When needed, these hand-sized, min- 
iaturized transceivers are connectable with telephone 
land-lines. If the trip involves several cities, it is quite 
common, for example, to hear one of the President's 
assistants using a handi-talkie to the travelling White 
House switchboard, operated in conjunction with the 
radio base station, to check plans with a White House 
advance man several hundred miles away. 

President and press inseparable 

While the marriage often has shotgun aspects, a 
modern President and the press are inseparable, be 
it on the island of Samoa or the great banquet hall of 
the Waldorf Astoria Hotel in New York. From 30 to 
more than a hundred correspondents, photographers, 
broadcasters and their technicians with thousands of 
pounds of equipment move with a chief executive. 
The size of the party depends on the trip. A White 
House press chartered plane for a routine weekend 
trip to Texas usually involves 40 to 60 media repre- 
sentatives plus White House travel and communica- 


tions personnel of which a representative of AT&T is 
a permanent adjunct. 

The demands of this group rank only a shade below 
those of the White House since it benefits a President 
nothing to sow his oratorical ideas on barren ground. 
And nothing can be more barren than a piece of 
deserted real estate on which a President may make 
a spontaneous but momentous remark. Experienced 
White House road reporters look around overhead 
for telephone wires, then for nearby buildings. If the 
landscape is blank, the story keeps until the next stop 
but this rarely happens these days. 

I still recall a dismal day an eternity ago when 
Presidents still travelled by train. We were with Presi- 
dent Harry S. Truman in the Pacific Northwest. The 
train halted on an isolated siding outside Eugene, 
Oregon, for servicing. Reporters back in the press car 
put aside their copies of "War and Peace" to stroll 
along the tracks to the rear car where Mr. Truman 
was certain to come out on his observation platform 
for fresh air. 

Telephone men with the President 

There was no crowd for this was solely a service 
stop to re-ice the big bunkers required in those days 
for rolling air conditioning systems and to check the 
axle boxes for lubrication. Mr. Truman's only spec- 
tators consisted of his travelling companions, railroad 
workers and two telephone men who routinely 
hooked up a long distance circuit for the White 
House at each stop in case the President wanted to 
make or receive calls. 

Since the President had no telephone business to 
transact, the two technicians were ready to discon- 
nect the circuit after the train pulled out. 

As the icing equipment was being rolled away, 
a reporter asked H. S. T. what he thought of a recent 
statement by Soviet Premier Josef V. Stalin. It was at 
this moment that Mr. Truman said in public for the 
first time that while he "liked old Joe," the Soviet 

leader was "a prisoner of the Politburo" and said only 
what his wardens wanted him to say. 

The reporters flushed as a covey of quail before a 
pointer. They were torn by deep conflict — possession 
of a major news story and the gnawing knowledge 
that the train would depart in moments, leaving them 
in one of America's larger nowheres. 

One intrepid reporter spotted a small dwelling 
about 200 yards away and sprinted for it. I knew 
there could not possibly be more than one telephone 
in the house, if any at all, and was about to accept 
complete defeat tempered only by sinful anticipation 
that this brash competitor would miss the train. 

By some divine guidance, I looked at the two tele- 
phone men standing beside the train. One of them 
had the end of a wire in one hand, a telephone in the 
other. I pounced and pleaded. Within seconds he 
had the instrument connected again, got the Eugene 
operator and 1 was babbling the basic news details 
to the San Francisco bureau of my press association. 

I dictated no more than a bare-bones outline of 
the facts when I heard the crunching metallic strain 
of the train about to start. Handing the phone back 
to the men with deep gratitude, I raced afoot along 
the train behind most of my colleagues and pulled 
up at the first open Pullman door. We could see the 
lucky man who had gone to the small house breaking 
all records for open-field running as he made for the 
train. 1 felt smug, but only second-place smug until 
the runner stumbled into the car, badly out of breath 
from his dash. 

"There was a phone in the house," he gasped, "but 
just as I got my office, I heard the train start." 

Press expects good service 

The White House press of 1967 would be shocked 
by such communications. AT&T would be expected 
routinely to have at least 20 long distance lines con- 
nected in the same open field, complete with tables 
and chairs and other facilities for the press. 


The inter-locking relationship between the Presi- 
dent, the media, the public and communications 
facilities becomes tighter and more essential with 
each year. Aside from scientific and technical prog- 
ress involved, distribution of news is now so much a 
part of the presidency that if a chief executive drops 
from public view for very long, readers, listeners and 
viewers here and abroad begin to ask disturbing 

Critics may say it is self-serving, but no President 
has been quite as conscious of media technical re- 
quirements as L. B. J. And there is reason to believe 
his successor will be even more aware of the need 
to get his story across. 

Communications seem effortless 

,Mr. lohnson may not be expertly aware at times of 
communications difficulties and perhaps this, to put 
it plainly, is because his own access to telephone and 
Teletype, plus sophisticated radio, seems so effortless 
that he takes such technical aids for granted. 

Seated in his office beside a Call Director that can 
route his calls through four different White House 
switchboards which have the capability of pre- 
empting any busy line in an emergency, a few feet 
away from the desk, two press association teletype- 
writers, operating 24 hours a day in soundproof hous- 
ings, and three TV screens to monitor each of the 
networks, it is small wonder that a President comes 
to accept this sort of arrangement as a norm. 

He sees press association reporters lugging 10-watt 
walkie-talkies and assumes that if he can reach the 
rest of the world in seconds, we can do the same. 
For example, he thought sufficient communications 
equipment for the world could be installed overnight 
at Classboro, New Jersey, for his meeting with Soviet 
Premier Alexei N. Kosygin in the early summer of 
1967. After all, AT&T and the Signal Corps were able 
to provide the White House and the Soviet party with 
all the circuits they needed. 

This comforting attitude did not take into consid- 
eration such factors as White House priorities, mar- 
shalling an army of installers and tons of equipment, 
provision of extra power and a simple but unrelenting 
thing called the clock. Operating in darkness and 
intermittently heavy rain, thousands of technicians 
could not have met the requirements in the few hours 
allotted them. But they came close. By the second day 
of the meeting there were hundreds of circuits oper- 
ating virtually from the front yard of "Hollybush," the 
graceful old house where the Big Two met on the 
campus of Southeast New Jersey State College. 

What the future may hold 

What of the future for presidential communica- 
tions? An entirely portable radiotelephone about the 
size of a small book with secure frequencies linked to 
the nearest mobile operator. Vestpocket shortwave 
transceivers working with powerful base relays, fixed 
and mobile, to keep not only White House staff mem- 
bers but all key government officials available to the 
President and each other around the clock. 

And just over the horizon, highly miniaturized tele- 
vision sets as portable as today's transistor radios, 
face-to-face conferences between heads of state 
thousands of miles apart as they talk over voice- 
picture circuits. 

Add to these developments the upcoming super- 
sonic transport aircraft which will be able to take a 
President and his entire travel party across the Atlan- 
tic for lunch and back to Washington by nightfall, to 
the Far East for an evening meeting and back to the 
White House the next day. 

There will be new human requirements, too. Of 
necessity, future Presidents must have more knowl- 
edge of geography, as well as geopolitics. There will 
be greater pressure on them to have at least minimal 
working knowledge of languages other than English. 
In short, their knowledge of the world must enlarge 
as the world grows smaller. D 



The Pervasive Influence of Chemistry 

by James C. G. Conniff 

Do-it-yourself clothes, 25-cent bicycles, harnessed 

sunshine and harmless suds are real possibilities 

resulting from the systems approach to innovation and 

providing researchers the freedom to explore. 

Today's man can truly be identified as a chemical 

In the years since 1774 when the French chemist 
Antoine Lavoisier explained the phenomenon of com- 
bustion and thereby sired what we now call modern 
chemistry, the research chemist has become involved 
in just about all aspects of modern man's life: the 
food he eats, the drugs he takes, the clothing he 
wears, the house he lives in and the office where he 
works, the vehicles he rides and the fuels that power 
them, and the many methods he uses to communi- 
cate with his fellows. 

Much of this progress can be attributed to the fact 
that a large number of chemists now live the inter- 
disciplinary life, practicing their art with knowledge 
gained from colleagues in adjoining scientific fields 
and approaching their problems with a new "sys- 
tems" point of view. 

Many chemists — largely in universities — are study- 
ing matter in the traditional way: by looking at indi- 
vidual atoms and molecules and the reactions and 
bonds between them. But chemists in industry, con- 

fronted by the pressures of competition and the need 
to produce utilitarian things, find they must cope 
with the "real world" of their science. This means 
they have to study large aggregates of atoms and 
molecules in all their complexity and interactions 
with their environment. 

Industrial chemists find they must now look at 
overall chemical systems in addition to the individual 
components. It is this "chemical systems approach" 
that has had profound effects on medicine, health 
services, agriculture, water resources, environmental 
control, housing, construction, transportation, com- 
munications, and information handling. And as this 
approach becomes more widespread, it promises to 
give birth to new and even broader chemical systems 

Since today there are workers in more than 30 
branches of chemistry — many of them interacting 

Mr. Conniff, an assignment writer specializing in medical sub/ects, 
won the American Heart Association's Howard W. Blakeslee 
Award for national magazine reporting on progress in (he diag- 
nosis and treatment of strokes. 

Researcti at Bell Telepfione Laboratories, 
like this pliotoctiemislry experiment 
at left, tias broad impact on modern life. 


Pervasive influence of chemistry is demonstrated at this meeting 
of Dr. O. C. Selfridge of MIT, Dr. William O. Baker of Bell Labs, 

A. Russell Ash of the White House staff, and Dr. John W. Tukey 
of Bell Labs and Princeton. Below, Dr. Baker confers with aides. 

with one another and their kinsmen in such related 
fields as physics, metallurgy, electronics, biology, and 
medicine— chemistry has matured into a truly inter- 
disciplinary science. Consequently, no one individual 
can serve as the spokesman for all chemistry. There 
are many who are highly qualified and articulate. But 
one who speaks with particular eloquence on many 
aspects of chemistry's all-pervading influence on our 
lives is William O. Baker, vice president for research 
at Bell Telephone Laboratories. 

His credentials include a doctorate in physical 
chemistry from Princeton in 1938 (at age 23), mem- 
bership on many of the nation's highest scientific 
bodies, a prolific career as an inventor and researcher 
in chemistry at Bell Laboratories since 1939, and 
holder of numerous awards, including American 
chemistry's highest honor — the American Chemical 
Society's Priestley Medal (in 1966). 

Dr. Baker is a principal articulator of the systems 
approach to chemistry. It's his belief that concepts 
stemming from this approach "are re-integrating frag- 
mented scientific disciplines in universities and are 
benefitting a wide range of technically-based indus- 
tries." The result, he asserts, will be a vastly enlarged 

common base of knowledge that will give chemists 
"great opportunities for advancing the well-being of 

In a recent interview, Dr. Baker discussed some 
important areas where chemistry, much of it based on 
a systems approach, presently does — or some day will 
— enhance the quality of the total environment in 
which we live. 

The chemically-derived miniaturized sophistication 


of integrated circuitry inspires Dr. Baker to envision 
from its application such future boons as tiny chemo- 
electronic micro-sensors that may: 

... Be installed in cars to improve the coordination 
of moving parts and accessory equipment and bring 
about more efficient fuel combustion, which is pres- 
ently at a level that "makes the automobile's role in 
air pollution inevitable." 

. . . Improve health by stabilizing home and office 
temperature-control and humidity. 

. . . Make possible the production of rugged but 
precise instruments for handling mass diagnoses to 
combat heart disease, cancer, and stroke. 

. . . Enable both commercial processor and house- 
wife to reduce drastically the waste of food, while 
greatly improving its color, taste, texture, and nutri- 
tional content. 

. . . Help revolutionize the chemical industry itself 
(a revolution which Dr. Baker says the sensors have 
already started) by eliminating many human variables 
that affect the quality of production and freeing peo- 
ple to "exercise imagination and creative thinking." 

Dr. Baker is optimistic about chemistry's role in 
finding a lasting and clean power source for the auto- 
mobile and the resulting favorable impact on the 
petroleum industry. He points out that such a power 
source, from petroleum itself, "could well be based 
on hydrocarbon oxidation, not as now to produce 
volume change from explosion in a car's cylinders, 
but to produce ions — charged particles of one kind 
or another — which could then be collected in a fuel 
cell to give an electric current. 

"Up to now we've emphasized the gas pressure- 
volume changes in power conversion. There is also 
ionic oxidation, which is the basis of a very pesky 
kind of oxidation — the corrosion of metals. There is 
no reason why we cannot equally emphasize the 
electrical-charge changes in combustion. What is in- 
volved in this approach to the utilization of the fuel 
cell is what you could call, if you wanted to be quaint 
about it, a 'controlled corrosion' of gasoline." 

The result could be a marked reduction in auto- 
caused air pollution. 

Dr. Baker expects that advances now under way in 
polymer chemistry will one day empower technology 
to use such recently wasted materials as the olefins in 
the gaseous effluvia from wells and refining to con- 
struct "throw-away factories" of polymers and inor- 
ganic composites. In these intentionally fly-by-night 
structures, industry will be able to make, from the 
same kind of raw materials, vast quantities of the con- 
sumer goods for which people the world over yearn 
daily. Industry will do it, he predicts, so economically 
that there is sober prospect some day of "the wholly- 
extruded 25-cent bicycle." 

Moreover, this approach offers the solution to in- 
dustrial slums, whereby the factories themselves 
would be discarded, once their planned production 
orgies are over. The polymers used to build such dis- 
posable structures would not be all wasted. They 
could be partly reduced to their original raw form and 
re-utilized, saving both money and resources. 

"Do-it-yourself clothes" 

Today's surge of interest in throw-away paper 
clothing isasign, Dr. Baker maintains, of an imminent 
upheaval in human attire which research on the poly- 
mer molecule practically guarantees. To him, that 
means relief for the human spirit in being able to 
throw out a suit, shirt, tie, dress, or sweater before 
one tires of it — because it will be so cheap. 

He also sees the possibility of a breathing, auto- 
matically heat-adjusting, strippable "polymer salve" 
— a self-moldable type of clothing — which we could 
apply to our bodies for both protection and adorn- 
ment, much as birds have feathers and beasts have 
fur. Such a plastic coating, summoning up people's 
latent instinct for design and self-expression, is an 
aspect of the contributions that chemistry will make 
to the new leisure. 

In this connection, chemistry is contributing to 


easily workable materials for home projects, to do-it- 
yourself casting compounds for works of art, to more 
direct control over the chemistry of photography, to 
small personal video communications links that will 
give direct visual access to world art centers and 
libraries, and to information resources for the enrich- 
ment of the mind — including the means to make 
inexpensive copies of just about anything. 

The battle against detergents 

Chemistry is already winning the battle against de- 
tergents as a source of water pollution and as a skin 
irritant. Dr. Baker declares. "Chemists have given us 
the bio-degradable detergents, which can be decom- 
posed by bacterial organisms even though the deter- 
gents are derivatives of paraffin which, in turn, is a 
derivative of petroleum. 

"In the laboratory we've found just the right chain- 
like molecular arrangements that enable the micro- 
organisms in water to eat and destroy detergents by 
ordinary bacterial cycles. We've also applied control 
to the penetration of skin tissues by the detergents' 
chain-like links and electrically polar ends. By learn- 
ing how to measure much of the diffusion and ab- 
sorption characteristics of various structures in the 
protein-like tissue of the skin, chemists have man- 
aged to minimize irritation from detergents. 

"This 'transport effect,' by the way, is a good ex- 
ample of 'chemical system studies' — the movement 
of molecules in a surrounding chemical medium — 
and constitutes one of the most challenging basic 
scientific fields we have," asserts Dr. Baker. "It applies 
across the board: whether we're talking about disper- 
sion and absorption of carbon dioxide and its affect 
on earth's atmosphere or the movement of deter- 
gents through cutaneous tissue." 

Dr. Baker foresees a bright future for the Bell Labs- 
developed silicon solar cell which converts the sun's 
rays into usable electric power. This method of tap- 
ping the 16 trillion kilowatt hours of energy the sun 

pours on the earth each day — equal to the energy 
stored in the earth's total reserves of coal, oil and 
natural gas— is already 12 percent efficient, as against 
six to eight percent efficiency for other means of 
generating electric power, such as gasoline engines. 

Because nuclear power plants combine efficiency 
with economy for central distribution, he doesn't see 
much application for the solar cell in that area. But 
he does feel there is a big future for it in the rooftop 
installation, especially in power-starved emerging 
countries with their great need to heat and air condi- 
tion buildings and to mount manufacturing programs. 
There is one hitch: the present high cost of the silicon 
solar cell — consisting of two ultra-thin layers of a 
crystalline element as common as the sand it consti- 
tutes. The layers have to be delicately and expensively 
put together to induce a voltage at the all-important 
"p-n (positive-negative) junction" between the layers. 

"We can afford to make these cells in the labora- 
tory," says Dr. Baker, "and to use them by the thou- 
sands in communications satellites, but we have yet 
to find a way to produce them by the acre, economi- 
cally. When that day comes — and it will — look for 
the rooftop solar cell unit to make any sunny place on 
earth habitable and productive." 

Metals more pure, more useful 

A Bell Labs metallurgical-chemical achievement 
even more esoteric than the solar cell is al